Jeep CEO Implements Turnaround Plan After Big Sales Drop

Detroit — StellantisJeep is known for its ability to climb difficult terrain, but the latest challenge it faces is achieving one million vehicle sales locally by 2027, which will be very difficult.

Jeep, a sought-after auto brand, has seen sales decline in the United States for five years, and 2024 is expected to be the sixth.

However, Jeep CEO Antonio Velosa believes the brand’s worst days are behind it and that the 1 million sales target is still within reach. The company is implementing a turnaround plan for the American SUV brand that he says is already paying off after sales fell 9% in the US in the first six months of the year.

The plan includes lowering prices across all vehicle categories, including full-size models like the Jeep Compass and Grand Cherokee SUVs; offering special offers like 0% financing or incentives; and increasing spending on marketing and advertising, Velosa said. The plan will also include an upcoming roadshow with dealers to address additional issues and concerns.

Such moves can eat into profits, but the brand’s average transaction prices have risen sharply from less than $40,000 in 2020 to more than $50,000 this year, according to Cox Automotive. Jeep’s average transaction price has been above the industry average since 2021, Cox reports.

“The good thing is that the measures we implemented in the previous months also led to significant growth in the United States,” Velosa told CNBC during a virtual interview on Monday.

Velosa's comments came a day before the head of the Stellantis National Dealer Council wrote a scathing open letter targeting Stellantis CEO Carlos Tavares over the company's sales losses and other business decisions.

Stellantis sold more than 1.5 million vehicles last year in the U.S., down about 1% from 2022. That compares with an industry-wide increase of 13% in 2023.

Jeep, which reports quarterly sales, saw a boost in the U.S. last month: up 28% from August 2023 and 55% from July, Velosa said. Jeep also reduced its inventory by about 25,000 units during that period. But the brand has a long way to go to make any noticeable sales turnaround.

Jeep sales in the U.S. fell 34% from an all-time high of more than 973,000 SUVs sold in 2018 to less than 643,000 units last year. While most auto brands increased their sales last year, Jeep’s sales fell about 6%.

The recent declines come on the heels of the company ending production last year of the base Renegade and the compact Cherokee sport utility vehicle — two key models whose U.S. sales peaked at about 300,000 units annually from 2016 to 2019.

“The loss of the Jeep Cherokee and Jeep Renegade was a big blow to us,” Velosa said. “Our market coverage dropped from an average of 80 percent to 45 percent.”

Velosa said Jeep expects to regain market share “very quickly” and return to 80% market share, which includes the segments in which Jeep competes, by the end of next year, when it introduces an unnamed replacement for the Cherokee as well as new electric models.

In addition to halting production of new models, Stellantis brands, such as Jeep, focused on profits rather than market share during Tavares' tenure as CEO.

Tavares has been on a cost-cutting mission since the company was formed through a merger between Fiat Chrysler and France's PSA Group in January 2021. It's part of his “Dare Forward 2030” plan to boost profits and double revenues to 300 billion euros ($325 billion) by 2030.

As part of this plan, Jeep aims to sell nearly 1.5 million SUVs globally by 2027, including 1 million in the United States.

To achieve those goals, Tavares said earlier this year he allowed some leniency on some pricing, incentives and other financial targets after speaking with the company's agents.

Velosa said he is continuing those efforts by meeting with dealers about transformation initiatives. He will participate in a dealer roadshow starting next month with the brand’s new North American president, Bob Bruderdorff.

Jeep, the largest seller of plug-in hybrid electric vehicles in the United States, will also introduce several new vehicles. The brand will launch the all-electric Wagoneer S later this year, followed next year by a Jeep Wrangler-inspired “Recon” SUV and extended-range plug-in versions of its Wagoneer and Grand Wagoneer large SUVs.

In launching such vehicles, Jeep increased its media spending by 20% compared to the first half of the year, according to the automaker.

“Now is the time to push our sales and accelerate them to recover as much as we need. And next year, obviously we will be talking about full growth, as we have new products… I think (next year) will be a completely different story,” Velosa said.

Jeep is also trying to improve the quality and reliability of its vehicles, which have previously been below average in third-party ratings. That includes delaying the launch of the upcoming Wagoneer S and Recon models by four to six weeks, he said.

Building problem-free vehicles, however, is easier said than done in the auto industry. Jeep confirmed Monday that it is cooperating with U.S. auto safety regulators on an investigation into more than 781,000 of its newly manufactured Jeep Wrangler and Gladiator sport utility vehicles after reports of under-hood fires.

Velosa confirmed he was aware of the investigation but declined to provide additional details. Earlier this year, Tavares highlighted quality problems within the automaker, particularly at a plant in suburban Detroit that produces the Ram 1500 pickup truck.

“We closely monitor the quality development of the Jeep Wagoneer S at the factory, as well as the Jeep Recon,” Velosa said. “The only command I get from the factories is to deliver the vehicle when it is in the best condition.”

The new all-electric SUV will be produced at Stellantis’ assembly plant in Toluca, Mexico. The company has not confirmed the production location for the replacement for the Cherokee SUV, which is built at a now-idle plant in Illinois.