Selling Jeep: why it can’t happen and how it can happen
Analysts and autowriters are falling over themselves yet again to talk about how Chrysler could sell Jeep. Partly that’s just to reuse their old “Daimler’s selling Jeep” stories, I suspect; partly it’s because Mahindra is coming to America, with their own vehicles that share common spiritual ancestors.
As a company, Jeep cannot really be split off from Chrysler. Yes, production is (aside from Patriot and Compass) unique to Jeep; the Dodge Nitro is part of the Liberty production line, but it’s not a major vehicle and could be dropped easily enough. The hard part is the shared engineers and components. Jeep is intertwined with Dodge Truck quite thoroughly. It would take a long time to separate Jeep from Chrysler, not that it couldn’t be done with enough time, money, and focus.
But who would really want (and be able to buy) Jeep? Toyota already has an offroad reputation thanks to the 4Runner and Land Cruiser. Ford has marketed its vehicles as being off road ready, and doesn’t need vehicles that can actually go offroad without major modifications to reap the benefits of their years of marketing. GM is trying to get RID of Hummer completely, buying dealerships to avoid lawsuits. Honda rarely buys anything they didn’t invent.
Wall Street seems to think Mahindra or Fiat will buy Jeep - but why would they? Mahindra makes Jeeps already… perfectly suited to their market and far better suited than Jeep itself to higher gas prices. Fiat… they’d be nuts to go into an area so far from their home turf. But analysts don’t think like that; after all, they were very happy with Daimler ruling over Chrysler until the end. (See our earlier Wall Street blog.)
There is one possibility, though.
A more than usually knowledgeable reporter pointed out to me that the Jeep name could be sold without actually selling Jeep. Say Mahindra were to pay, say, $400 million for the name, which has a global reach. Mahindra has the products; they don’t have the name recognition outside of India. They could perhaps buy the Wrangler plans and plants; or perhaps not. It would not really be needed. Chrysler could simply drop the Wrangler and its unique platform, close down another factory (something which analysts always like). The Patriot could be renamed, the Caliber and Compass merged. The Liberty would be dropped and anyone who wanted one would be steered to a Nitro until the factory could be shut down. Finally, the Grand Cherokee is supposed to merge platforms with Durango anyway; so the name could be dropped and Durango would carry the torch. Chrysler would then have just two brands, with Dodge being its Toyota and Chrysler being its Kia.
It’s possible. It’s still not likely, but it’s possible.
Anything is possible. In 1997 who would have thought Chrysler would have been taken over by Daimler-Benz and the life of a great company, a company that was by far the most dynamic of the big three, would be slowly drained away in just five years time? Or that Delphi would go bankrupt? Who would have thought that Bear-Sterns would fail, cut apart by the Wall Street / Treasury Department industrial complex?
The Jeep name itself would be very valuable to a competitor, as would the dealer network worldwide.
I don’t know if anyone at Cerberus will listen to me, after all I’m just a consumer, just someone that owns Chrysler products, but I would urge them to avoid this, even if it means losing money short term. Longer term, Chrysler LLC can be profitable, it can be an American equivalent of BMW. It will be much stronger with Jeep as part of the mix. There will always be a market for SUV’s and true 4X4’s. Not everyone can afford a Land Rover, I, and many other Americans, will not buy a Mahindra or a Chinese product. You have the Patriot, a great product, but you are not taking advantage of it–advertising is not touting itss fuel efficiency, its amount of space; you have 50 mpg diesels in Europe but you aren’t bringing them here. What a great selling point it would be to have a SUV that can drive across this nation on three tanks of diesel. Try that in a Prius.
I say it again, Chrysler can be an American BMW–a dynamic company that builds desirable products. With little effort Dodge can build fun, desirable, good looking cars that will make Cerberus alot of money. It can build Chrysler into a brand to rival Audi or Lexus and make money. Please remember the sorry shape Audi USA was in circa 1996 and how they turned it around. It can happen with your Chrysler brand if you will use the talent you have. If you can’t bring that brand above the sorry level it is now, with stripper rental car models, please end the brand now. It is a tragedy, it practically breaks my heart every time I have to look at one of these new Sebrings.
No one, not for ten years, has built a competitor to the Prius. Why not build a sleek body on the Caliber platform with a hybrid drivetrain. Are you telling me Chrysler can’t match what Toyota did in 1998? What an opportunity! Chrysler could make something that looks better, has more room and power, and they’d put Prius on the trailer. Ecovoyager is a great starting point for the styling and interior.
I know the people at Cerberus are smart, I’m sure they’re well meaning. I fear too many are held hostage by people who just care for short term stock price and the like. I urge them to consider the long-term health of an iconic company, the employees, and America’s future competitiveness as a great economic power. And consider the opportunity they have to make more money in the future.
I say, keep Jeep.
But I dislike the Chrysler = Kia comment at the bottom. They are more Hyundai.
Yes, in a way they are like Hyundai–certainly more like Hyundai of ten or fifteen years ago than Chrysler in the mid-fifties, for example, when they were a serious competitor in the prestige car class, or even the 90’s when they had the Concorde and New Yorker / LHS.
Ok, that’s where Chrysler is, no doubt many consumers who buy Hondas and Toyotas, Lexus and BMW, view Chrysler as a Hyundai, an inferior one at that. But what kind of result does Cerberus expect with that? Even Hyundai didn’t remain the Hyundai of the late 80’s or early 90’s. They kept working at their reputation and image and they are a serious competitor to even Lexus today (Genesis and Vera Cruz). I don’t see that kind of direction for the Chrysler brand.
If the idea is to be an American Hyundai they would do better with Dodge, and eliminate Chrysler entirely. Why would it be needed in such a strategy? Hyundai can perhaps justify the KIA brand that has a great deal of overlap, but Chrysler LLC, burning through cash like a brushfire through California, does not have the luxury of two overlapping brands. Better to ditch the Chrysler brand than it would be to sell Jeep. But why not let Dodge be Hyundai and Chrysler be Lexus if you will? Then you are not competing with yourself. If I’m crazy I invite someone to tell me why that strategy would be wrong. It seems far crazier to divest Jeep, the only brand they have with a strong, clear image.
We heard Cerberus wants to eliminate redunant models. I hope Cerberus will consider killing the Durango replacement and funding only a new Grand Cherokee–why does Dodge need a traditional SUV? It just cuts into Jeep.
This is after all why I have sometimes said Chrysler should drop all but two or three cars - an extended wheelbase second-generation 300C, the T&C (but top trim only and with more differentiation from Dodge), the Sebring Convertible. Period. That’s two vehicles to avoid losing existing customers and one to establish a decent reputation.
As for Dodge… guess it continues. But I’d still like to see Dodge pushed off into trucks and muscle cars alone, with Plymouth coming in to handle the ordinary cars. That means no Dodge Avenger, no Dodge Caliber, and the Caravan continued only, again, to keep those repeat customers.
Why no Avenger, Caliber, etc.? Reskin and rebadge them as Plymouths. Use the upcoming Nissan as the small car and grow from there through the newly-renamed Avenger and Caliber. The Caravan could always come back as the Voyager. Plymouth then becomes the “people-mover” division.
Good for you BILL! Absolutely. Good follow on to Dave’s comments, which are also relevant.
I don’t think Chrysler should “sell” Jeep. Chrysler is in an okay financial situation.
Chrysler needs to be the as some would say uber luxury to compete with the likes of BMW, Mercedes, Audi, Infiniti, Acura and so on.
Dodge needs to be the Toyota, Honda, Hyundai, Nissan, Ford, and Chevy/GMC. Build SRT variants of EVERY model sold! Even the Caravan and Journey!
Jeep as I see it, is okay as it is. Just tweak it a little. Make them more fuel efficent, and offer ALL Jeeps in diesel. We build Grand Cherokees and Commanders in the same plant, why not drop the 3.0 into the Commander while your at it?
Plymouth? BRING IT BACK! Top hat the Dodges. Make this the Kia, Scion and so on fighter.
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