Will Navistar buy Jeep?
Before I can be accused of pulling a Leinert, the answer is “probably not.”
Jeep would be hard to pull away from Chrysler without one or the other being seriously wounded, but it’s not impossible. The Nitro would be dropped, the next-generation Durango either dropped or licensed or somehow dealt with, the engines licensed until Jeep could buy something new. Engineers could be reassigned or computer files sent over to other engineers who could spend some time trying to figure everything out. It wouldn’t be ideal, it wouldn’t necessarily make sense, but it could happen.
On the other hand, does Navistar actually have the money to make it happen? And is Jeep worth that much in its current state?
Plenty of other companies have 4×4 cred now. Toyota, Ford, and Mahindra have all made names for themselves, Toyota and Mahindra through actual street machines, and Ford through marketing and sponsorships. Just having off-road cred isn’t enough anyway; Hummer is being sold off and presumably could out-Jeep Jeep.
Based on the numbers, any buyer for Jeep would have to put a few hundred million into the acquisition itself, a few hundred million into bringing products to market, and then provide something to the creditors. Does Navistar even have the money?
Navistar had a gross profit for 2007, 2008 ($2.8 billion), and Q1 2009 ($647 million). Their net loss in 2007 was $120 million; in 2008 they made $134 million; in Q1 2009 they made $234 million. Still, their total liabilities were, in January, $11 billion, with $9.6 billion in assets. They are losing cash, and I don’t figure this will be a good year for them. (Q1 2009 for them ended January 2009 so it doesn’t fully reflect current events, but net change in cash was -$364 million.) This year has been bad for the commercial-truck market; Sterling was shut down and the company formerly known as Freightliner has experienced the revenge of Daimler.
I don’t see Navistar as being able to keep Jeep going as a mass market company anyway. Perhaps they could keep it running like Kaiser or even AMC did, but the cost of playing the game has shot up dramatically and they have real competitors now. They just aren’t big enough and they don’t really have the kind of assets needed for the typical Jeeps: gas-powered Wranglers, Libertys, and Grand Cherokees. The enthusiasts would buy diesel Wranglers, but how many are there? Really? Compared with the hordes who used to buy Libertys, Cherokees, and Grand Cherokees?
As for other Jeep buyers, I don’t see any. Mahindra isn’t sized to buy Jeep, and has already turned it down; Toyota is but has no need for it, and doesn’t usually buy other companies (especially non-Japanese companies). Ford could use it but has no cash; ditto GM which can’t even keep its Pontiac brand alive, or hold onto Opel. Honda and BMW both have leaders who are smart enough to know what they do well, and stick to it. Who is left that has money? Only the Chinese brands, and apparently they’ve already turned down Jeep (though, apparently, not Hummer.)
Time will tell; strange things have indeed happened, and the public statements from some of the parties have been shown to be unreliable. But Navistar… I would not bet on it.
When I bought my 2002 GC Limited, I could have never guessed this would be the state of Jeep as a product in such a short time. But looking back, I think as far as GC goes, the product has been inferior since 2004 IMO. Diamler likely is to blame. I love my 2002, and wouldnt trade it for a new one at all. The 2011 looks very good, inside and out though, looks like a real winner. I think all Chrysler products were better in 2002, then they are now, looks and style wise. Its sad to me, that Jeep has fallen this far.
The current Chrysler management (pre Chapter 11) sees the Jeep brand as this magical seven slot grill. They slap that grill on anything and “poof”, instant icon. That is why there is a Compass, Patriot and soon the Grand Cherokee with four wheel independent suspension. Many of us on Chrysler’s consumer advisory board have argued that the Jeep brand is more than the grill and some fender flares on a tall car. I believe without an industrial nature the Jeep is just another SUV. Don’t get me wrong, the Patriot and the upcoming Grand Cherokee are great station wagons. Chrysler had better wake up to the fact what the V-Twin motor is to a Harely, solid axles are to a Jeep.
The Wrangler’s current success is likely due to its uniqueness. That same uniqueness makes the Wrangler expensive to build. The costs of the Wrangler chassis can be spread out over a Gladiator pickup, the Trailhawk SUV and an M-80 entry level truck for Dodge. The costs can be further spread out when Fiat sells Jeeps across Latin America. Would Sergio Marchionne keep the Jeep as an industrial device? Look at the Fiat built Iveco Massif.
Navistar is too busy buying up Monaco Coach. I hope they open up all the plants in northern Indiana again…
pat: I don’t see your point re solid axles. It’s not a heavy duty pickup, and besides M1151 Up-Armored HMMWVs are 4 wheel independent suspension at something like 5-6 tons dry weight. That’s way more truck than any jeep ever made.