Jeep Grand Cherokee: Placeholder Until Fiat-Based Models Arrive
May 24, 2010
To say the atmosphere at Chrysler’s Jefferson North plant in downtown Detroit last week was 
euphoric is no overstatement.
Indeed, Chrysler-Fiat CEO Sergio Marchionne’s unveiling of the revamped 2011 Jeep Grand Cherokee and his accompanying announcement of 1,000 new hires to build the SUV is worthy of celebration.
There’s no denying Chrysler has come a long way since filing for and emerging from bankruptcy a year ago. The fact that Chrysler is still around at all when most thought it wouldn’t be is significant.
However, the Jeep Grand Cherokee is by no means the savior of Chrysler. Despite the massive improvements in the iconic granddaddy of SUVs, the 2011 edition is mostly a new frock on last season’s fashion and largely placeholder until Chrysler can expand its portfolio with Fiat-based offerings.
Old School Entries in Decline
The loosely named midsize SUV category remains a large and important one. It is the third largest vehicle segment, behind midsize and compact cars, in Edmunds.com’s count, which includes everything from the Honda CR-V to the Ford Explorer.
The role of Jeep Grand Cherokee sales within the segment, however, has been in decline. In pure volume, Grand Cherokee sales peaked at 300,031 units in 1999 — and plummeted to a low of 50,328 units in 2009, Edmunds.com data shows. So far in 2010, as the old winds down tow usher in the new, only 19,304 Grand Cherokees have been sold.
As a result, the Grand Cherokee holds a scant 4.1 percent of the segment’s market share, a fraction of the share it commanded in the 1990s, which soared as high as 23.5 percent in 1993 when few SUVs existed.
Source: Edmunds.com
Despite signs of continued growth in the midsize SUV segment, divergent directions are occurring. Old school models like the truck-based Jeep Grand Cherokee are suffering precipitous sales declines, where as New Age models, which offer car-like fuel economy and ride, are experiencing sales growth. The top five best-sellers in the category are all comparatively fuel-efficient, car-based models: Toyota RAV4, Honda CR-V, Chevrolet Equinox, Ford Edge and Kia Sorento, respectively. In fact, the upcoming Ford Explorer is moving in the New Age direction.
“The focus is shifting to improved fuel economy and car-like ride versus off-road capabilities,” notes Edmunds.com analyst Ivan Drury.
The newest Grand Cherokee, indeed, will achieve better fuel economy. Chrysler puts fuel-economy ratings at 17 mpg city and 23 mpg highway for rear-wheel-drive models and 16 mpg city/22 mpg highway for the four-wheel drive version – up 11 percent from the old model thanks to the new Pentastar 3.5-liter V6 that will go into the Grand Cherokee and other new Chryslers. Other improvements on the Jeep include an upgraded interior, more rear passenger and cargo space and added safety features.
But Chrysler is quick to point out improvements also made in its off-road capabilities, which the company assures will be class leading.
Nevertheless, Chrysler executives appear confident about the Grand Cherokee, which they say has dealer orders running ahead by as much as 40 percent of their expectations and hint that brisk sales could result in adding yet-another shift at the Detroit plant.
Chrysler would do well to keep its euphoria in check.
– Michelle Krebs, Senior Analyst and Editor at Large
Photo by Chrysler
Chrysler CEO Sergio Marchionne unveils the 2011 Jeep Grand Cherokee at the automaker’s Detroit plant, where 1,000 plus additional workers will be added this summer.
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