Jeep Forging Ahead With Global Expansion, CEO Says

Plans call for producing Jeeps in China with joint-venture partner Guangzhou Automobile Group beginning late next year.

Byron Pope, Associate Editor

July 7, 2014

4 Min Read
Demand for Grand Cherokee and Wrangler high Manley says
Demand for Grand Cherokee and Wrangler high, Manley says.

CHELSEA, MI – Jeep continues to gain momentum, both in the U.S. and abroad, and it’s keeping its top executive busy making decisions to ensure the brand continues to grow at a rapid pace.

Mike Manley, president and CEO-Jeep, says the Wrangler and Grand Cherokee SUVs are the two hottest products in the lineup and the automaker is struggling to keep up with consumer demand.

Through June, Wrangler and Grand Cherokee sales were up 10.3% and 10.9%, respectively, which is keeping the Toledo, OH, and Detroit assembly plants churning.

The Toledo plant is on two shifts, while the Jefferson North, Detroit facility is on a 3-crew system, according to WardsAuto data.

Toledo had estimated capacity utilization of 125% in second-quarter 2014, and for full-year is forecasted to operate at 118% of capacity. Jefferson North had a Q2 utilization of 146%, and for the entire year is pegged at 138%.

In comparison, the North America light vehicle industry ran at 101% in Q2, and the year is forecasted at 98%.

“We’re working as hard as we can to get (inventory) levels up to where they need to be,” he tells WardsAuto during a media event here. “I wouldn’t say they’re critical, but I’d like to have more supply than we have.”

At the end of June, Wrangler and Grand Cherokee inventory levels stood at 54 and 60 days’ supply, respectively. Ideally, automakers like to maintain a 60 days’ supply.

Manley says further pressure is coming from export demand for the Grand Cherokee. Currently, about 20% of Grand Cherokee output is shipped outside the U.S.

“Our manufacturing and supply chain guys have done a phenomenal job,” he says. “They take every opportunity to squeeze out additional production. It’s amazing, a few extra (units) a day really does add up.”

The Wrangler also is exported, but at smaller volumes than the Grand Cherokee. Manley says the model’s unique off-road abilities have limited appeal in markets such as Europe, while it’s cost-prohibitive in countries like China.

The automaker recently began exporting the Jeep Cherokee, as well. Although it’s too early to tell how the SUV will perform overseas, early indications are positive.

“Feedback from Asia has been great and dealer interest strong, but we’re a couple of months away from saying the market really appreciates the vehicle,” Manley says.

India on Horizon; High Hopes for Renegade

Plans call for producing Jeeps in China, the world’s largest market, beginning in late 2015 with joint-venture partner Guangzhou Automobile Group. The Cherokee will be the first model built. The all-new Renegade small CUV is a likely candidate for production as well, but Chrysler has not revealed plans beyond the Cherokee.

Manley has high hopes for the Renegade, which will be assembled initially at the automaker’s plant in Goiana, Pernambuco, Brazil. The new model will be launched in the U.S., Europe and other export markets in the fourth-quarter, although volumes are unlikely to be fully ramped up before early 2015.

“We have very aggressive internal forecasts for that vehicle,” the Jeep executive says. “I’ve always believed that if you had the right vehicle in that segment, as long as your pricing is not completely out of market, you’re going to attract people that maybe would have gone into a hatch or small sedan.”

The automaker had planned to launch the Jeep brand in India by the end of last year, but the strategy was postponed because of market conditions.

Now, Manley says, the earliest the marque will be introduced in India is next year, although he doesn’t offer any guarantees.

“The potential for Jeep at its price points is small considering the size of the market,” he says. “We have to have a long-term, sustainable business case. I’m convinced it’s there, but I just like to be very comfortable.”

Manley says Fiat Chrysler Automobiles has a team of engineers working on ways to make the next-generation Jeep Wrangler more fuel-efficient to comply with looming government regulations.

Lightweighting being considered, as are more advanced powertrain alternatives. But whatever changes are made to Wrangler in the future won’t come at the expense of the model’s class-leading off-road abilities.

“We will not change what Wrangler stands for, that’s fundamental,” Manley says. “That means we will have to be innovative in what we do for the next Wrangler. It’s vital for the brand.”

The importance of the Wrangler to the Jeep brand also has Manley wary of new competition on the horizon. Today, he says, there are no direct competitors to the Wrangler, although the model is cross-shopped with vehicles in other segments.

The Jeep could be challenged by Land Rover, which reportedly is working on a new Defender for global markets.

“I would be naïve not to watch Land Rover very closely,” he says.

Asked if a Land Rover Defender could slice into Wrangler’s market share, Manley says, “They’re going to try.”

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About the Author(s)

Byron Pope

Associate Editor, WardsAuto

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