Jeep Hopes for Revival With New Grand Cherokee and Other Models

NEW YORK April 7, 2004; John Porretto writing for the AP reported that after sparking America's craze with sport utility vehicles 20 years ago, Jeep has seen its share of the SUV business shrink in recent years, largely because of a flood of rival models in all shapes and sizes.

Adding to the problem, analysts say, is Jeep's own limited lineup: the high-end Grand Cherokee, smaller Liberty and military-inspired Wrangler.

The numbers speak for themselves: a 4.2 percent drop in sales last year and the fourth straight year in which Jeep's market share either fell or remained flat.

The recent demise has contributed to a larger headache at DaimlerChrysler AG's struggling Chrysler Group, which sorely needs a better showing from Jeep if it hopes to post a profit in 2004 after missing its break-even target last year.

Jeep sold 440,559 vehicles in 2003, down more than 110,000 from its peak in 1999. Chrysler took on Jeep in 1987 with its acquisition of American Motors Corp.

"Unfortunately, Chrysler has allowed the Jeep brand to deteriorate, and they've lost ground to Toyota, Honda and Nissan," said Art Spinella, president of CNW Marketing Research in Bandon, Ore. "It's something they could have avoided with fresh product in a timely fashion."

Jeep hopes to quiet that type of criticism in 2004 by launching its most aggressive product offensive in years. The push takes center stage at the New York International Auto Show, where Jeep will show three new or revamped products.

During a media preview Wednesday, Jeep is scheduled to unveil the third generation of the Grand Cherokee, which was last redone in 1999. Jeep says the new model will be a few inches wider to provide more stability and about 5 inches longer to allow more leg and cargo room.

It also will be more powerful, becoming the first Jeep to offer Chrysler's popular Hemi V-8 engine.

The New York exhibit also will mark the debut of a more rugged version of the Liberty Renegade, and a diesel-powered Liberty that can increase fuel efficiency by 25 percent.

With those vehicles going on sale later this year, and a larger version of the Wrangler now reaching showrooms, Jeep hopes to be back above 500,000 in annual sales in the next few years.

"It's probably not going to happen this year, but going forward that's certainly an objective for us," Jeff Bell, Chrysler Group's vice president for the Jeep division, said in a pre-show interview.

Bell wouldn't talk specifically about new models beyond Grand Cherokee, Wrangler and Liberty, but he made it clear that other offerings were in the works. He cited several of the brand's former models, including the Commanche pickup and venerable Wagoneer SUV, as possible influences on future offerings.

"We just need to find the modern interpretation of those great vehicles," Bell said.

Analysts and industry forecasters say Jeep could introduce as many as three or four new models in the next few years.

Mike Wall, an analyst with the automotive forecasting firm CSM Worldwide, said Jeep sales have been hurt in part by a market shift away from traditional SUVs to easier-riding, car-based offerings known as crossover vehicles.

Building such a vehicle has been all but impossible for Jeep because of its commitment to giving all models a "trail-rated" designation, meaning they meet strict off-road specifications.

Wall predicts Chrysler will back off somewhat from its rigid off-road stance and introduce a softer-riding Jeep in 2006. Such an introduction would likely cause a ruckus among Jeep loyalists, but the brand must look to new markets to boost business, he said.

"If they want to drive volume and push the Jeep brand to a higher echelon, they'll have to move into that soft-roader realm," Wall said.

Some observers predict Jeep eventually will launch a mega-SUV or large sport utility truck to take on rivals such as General Motors Corp.'s Hummer brand.

Bell wouldn't say if Jeep's Hummer-like Rescue concept shown earlier this year was a glimpse of what's to come, but he said: "Jeep is an off-road vehicle, and you can get too big to be safe as well as capable off road. Some of our competitors have gotten vehicles that are too big. Jeep will not be too big."

That suits Jeep owner Mario Gallegos of Houston just fine. Gallegos, a state senator from Texas who's driving his second Grand Cherokee, said he'll stick with the brand as long as it continues to offer the type of rugged handling he needs to get around his state's diverse landscape.

"I don't drive the Jeep for its size," Gallegos said. "As long as I can strap my grandson in the back, it's plenty big enough for me."

Jeep: http://www.jeep.com