Jeep. It is perhaps one
of the strongest brands in the automotive world. It has a military pedigree
that dates back to at least World War Two, and
for generations, it has sustained its rugged,
classic, American image. It is also Fiat Chrysler's
top selling brand, and it inspires a rare sort
of cult like devotion other automakers would
kill for. Jeep specializes in
sport utility vehicles. It does not make a
single sedan or sports coupe. That has left it
extraordinarily well positioned for the recent
boom in SUVs. And I think one of the
cool things about the Jeep brand is over the years,
we've really stayed true to that first and core
being of authenticity and what four wheel
drive capability means. However, the secret is
out and automakers everywhere are ramping up
their own SUV and pickup inventories, and some
are aiming their products squarely at segments
Jeep has long dominated. Jeep is answering with
a slew of new innovations and new products
to preserve its strong position and
envied reputation. Industry insiders say Jeep
can no longer expect that its legendary name
and distinctive styling will keep buyers
coming back. Jeep traces its modern history
back to 1940, and its story starts
with war. Preparing for its involvement
in World War Two, the United States government
sent requests to 135 automakers for a quarter
ton light reconnaissance vehicle. Three responded Ford,
a company called Bantam, and a third company
by the name of Willys-Overland. Willys-Overland
made about 360,000 jeeps for
the U.S. Army throughout the war. As World War Two ended,
Willys debuted the first civilian Jeep, or CJ, for
the public in 1945. Before the war was over,
the government and really the public recognized what
a wonderful vehicle this was. So even before
the war was over early in the war,
actually the engineers Willy-Overland began designing
a civilian version. Willys-Overland was
allowed to begin manufacture before the war
is even over. July 17th, 45 the first
civilian Jeep rolled off the line. It released the
Willys wagon in 1946, the Willys-Overland truck in
1947, and briefly even a convertible sedan
called the Jeepster, which ran from
1948 to 1951. Over the years, the
Jeep brand name grew. At different points in its
history, Jeep has made pickup trucks, wagons,
military and civilian jeeps, and an array
of commercial vehicles, some that broke new ground
in engineering and design. For example, in the
1940s, Jeep released the first all steel station
wagon, which resisted rain and weathering much
better than the wood paneled wagons common
at the time. In the 1960s, the
Jeep catalog dramatically expanded to fourteen models from
just six in the 1950s. The Wagoneer, introduced
in the 1960s, brought the first overhead
cam six cylinder truck engine and was the first
four by four vehicle to have automatic transmission
and an independent front suspension. This was the
first time that a station wagon body with
four wheel drive and automatic transmission. Nobody had put an
automatic transmission through a four wheel drive
system before, which really expanded the market. So it
really stepped up the SUV game, really was
a game changer. In the 1970s, Jeep
introduced the first automatic full time four wheel
drive system, considered revolutionary at
the time. In the following decade,
the 1980s, the company came out with another
vehicle that would proved revolutionary, the Jeep Cherokee
XJ, one of the best selling SUVs of all
time, and a big step toward the compact crossovers
so frequently seen since in the 2000s,
Jeep released the Wrangler Rubicon then and now,
the most capable Jeep Wrangler trim level. In that era, the company also
came out with a four door version of the
Wrangler, which dramatically boosted sales. Over the years, ownership of
the Jeep brand has changed hands
several times. It was initially owned
by Willys-Overland, then bought by Kaiser
in the 1960s. Kaiser later sold Jeep
to American Motor Corporation and left
auto making entirely. AMC was then itself
sold to French carmaker Renault before Chrysler bought
AMC in 1987. Of course, Jeep was then
caught up in the troubles Chrysler faced
throughout its history, including an ill fated
acquisition by the German automaker Daimler, known for
the Mercedes Benz brand. Daimler sold Chrysler
to private equity firm, Cerberus Capital
Management, and then Chrysler went bankrupt
in 2009. It was briefly owned by
the US government and then sold to Italian
carmaker Fiat, forming the Fiat Chrysler Group
of brands. Despite this tumultuous history,
Jeep has been able to maintain a
surprisingly consistent fan and customer base, part of
the reason for this, say many auto industry insiders,
is its appeal to heritage. The brand has
a long and illustrious history, and models made today
bear a fair amount of resemblance to the
earliest Willys Jeeps sold to the U.S. Army. I would describe Jeep as
a very, very heritage built brand. In fact, it may
be one of the most heritage build brands in
the marketplace today. The best example of this,
of course, is the Wrangler, that imposing
rugged rock climber, beloved by hardcore off
roaders and people who want other people to think
they're hard core off roaders. Though it has
changed over time, the Wrangler's DNA goes all the
way back to the original Willys Jeeps sold
during the World War Two era. The civilian jeeps,
or CJ models that were built as the war
ended in 1945 lasted until 1986, a 41 year history. They were
incredibly popular. The CJ-5 alone had a
30 year production history, the longest of any
single production vehicle at the time it
was discontinued. The actual Wrangler name debuted
in 1986 in time for the 1987 model year. It is hard to emphasize
just how strong the Wrangler's reputation is
among off roading vehicles. The Wrangler is
absolutely by far and away the halo vehicle
of the Jeep brand. It's really the sole and
center of the Jeep brand. It's also one of
Jeep's hottest sellers in numerical terms. But the
Jeep brand really wouldn't be what it
is without the Wrangler. In fact, I would argue
that the Jeep brand couldn't exist in its
current state without Wrangler. Jeep sold about
228,000 wranglers in 2019 and 240,000
the year before. Apart from the Wrangler,
Jeep's other two most popular models in the
US are also pivotal products, in both Jeep's
history and the history of the
automotive industry. They are the Cherokee
and Grand Cherokee. The Cherokee began life in
the 1970s as a two door version of the
Wagoneer built on the Wagoneer's large platform called
the SJ platform in the
company's nomenclature. In 1984, Jeep transferred
the Cherokee and Wagoneer names to a smaller
platform that went by the label XJ. This was in part a
response to anxieties over gas prices spurred by the oil
crises of the 1970s. It was a pioneering move. And I think what Jeep
had originally kind of paved the way for some of
these other brands to create more comfortable, more car
like, nicer ride SUVs, because they knew that
people like that body style that like outdoorsy,
utilitarian, a lot of cargo space, usable space
type of vehicle. The XJ platform made the
Cherokee the first SUV with unibody construction, meaning
it was built using a construction method where
the body of the car and the chassis
are fused together. Unibody construction has long
been thought to offer many advantages for
certain types of cars. It can make them lighter,
easier to handle, and drive at high
speeds, for example. It hit the sport utility
vehicle and pickup truck segments later due to
the common preference for traditional body on
frame construction in vehicles that haul or
drive off road. Just like the way the
early Willys Jeeps provided a template for the
classic American jeep form that became the Wrangler,
the Cherokee was critical in helping to
define the template for the modern sport utility
vehicle and crossover that have become
ubiquitous in America. The Cherokee was really one
of the big models that inspired this huge rush
to SUVs that eventually came into full force
in the 90s. It would have happened
without that original 1984 Cherokee that really
planted the seed. The Grand Cherokee, released
in 1993, was a pioneering premium
crossover SUV. It looked modern, it felt
it modern, it was modern, all the way
through it. They really changed people's perception of
an SUV, that it could be your
daily driver. These key products and
others have turned Jeep into one of the most
adored and envied brands in the automotive world. Jeeps represent today vehicles
that are, for the most part, very, very
practical and functional for everyday life. But
they have this mystique about the brand that makes
people coming back for more. Much of what fuels
this admiration is a strong base of
customers and fans. Jeep owners have their
own clubs and schedule events dedicated
to driving. For example, weekend long
Jeep Jamboree off road trips have been happening since
1953, when a Jeep owner first organized a
drive across the Rubicon Trail in the
Sierra Nevada Mountains. Jeep has also listened to
its customers over the decades and used feedback
to refine the Jeep Wrangler's designs. The Wrangler changes little
from year to year, but Jeep does make
incremental improvements based on customer input. It's really the customers
that run the brand. And we listen to them and
and try to respond to them with what they're
looking for with respect to product. So a couple
of recent examples of us doing that are the diesel
engine in the in the Wrangler, they asked for
that very common request. Gladiator was a great
example of that as well, bringing a pickup truck
back to the Jeep line up. The Jeep
Wrangler's gradually shifting looks give it a
continuity with its past. It also makes it easy
to source parts for repairs. And Wranglers are
known for their excellent aftermarket
support. Jeep also has a
strong reputation outside the United States, even in
countries where American cars are not
that popular. For example, U.S. automakers
control a minuscule portion of the auto market
in Japan, where buyers favor smaller vehicles
with features more tailored to local tastes. However, of the American
brands in Japan, Jeep stands out. Japanese buyers
bought 13,354 Jeeps in 2019. The second most
popular American brand, Chevrolet, sold only 585
units the same year. Jeep sales were actually up
16% in Japan in 2019, despite the fact that car
sales overall were down 1.5% and import sales
rose only 3.2% percent. Interestingly enough, for a
country that loves small cars, the boxy
Wrangler is Japan's most popular Jeep model. Jeep is also making some
inroads elsewhere in the world. It is, for
example, becoming a serious threat to Land Rover
in Europe, surpassing the legendary British brand on
that continent in 2018. The strong brand recognition
has helped make Jeep Fiat Chrysler's best selling
brand by a pretty wide margin. FCA sold
923,291 Jeeps in 2019. The next best selling FCA
brand is RAM Trucks, which sold 703,023. No other FCA brand comes
close in terms of sales. That means that Jeep is
pretty well positioned to stick around as FCA
merges with the French carmaker PSA group. But that doesn't mean that
Jeep is immune to threats of its own. It
has maintained a loyal and strong reputation at home
and abroad, seemingly in spite of
some potential weaknesses. For one thing, none
of Chrysler's brands have historically done well
in reliability rankings. It's gotten some really
bad quality marks, and that hasn't stopped
the brand. The sales continue to grow,
so it's almost like Teflon in that regard.
It just gets criticism but people still like
it. Perhaps Jeep's success in spite of that has
shown the strength of the brand and the enthusiasm
of its base. And to be fair, FCA has
made an effort to improve reliability in
recent years. We are the longest lasting
SUV brand out there, and it's an award that
we recently got, which talks to the longevity of
the of the brand and the connection to
our customers. But we have a lot
of very durable vehicles that are still on the road
that gives us the longest lasting four by four SUVs
of any other brand out there. But apart from that,
Jeep is faced with a great deal more competition than
it has been in the past. The 1980s
Jeep Cherokee might have helped pave the way
for the crossover sport utility, but now virtually
every automaker has several crossovers
and SUVs. Passenger cars are kind
of almost the exception now. SUVs and crossovers
are really the norm. They are now the
biggest chunk of the marketplace. So the Jeep
brand really doesn't exist in anything resembling
a vacuum anymore. It now competes in the
biggest portion of the marketplace. Crossovers tend
to be profitable. Customers are willing to
pay higher prices for them than they have
been for comparably sized passenger sedans and
compact cars. In part, say analysts,
this is because buyers feel they are getting more
for their money in an SUV, more storage, more
capability, a more flexible vehicle. But competition is stiff and
a lot of crossovers look pretty similar. Jeep may have
the advantage here. Its vehicles do have
a very distinct appearance. However, cars are increasingly
sold on the strength of their interiors,
the comfort of the cabin and the features
available, such as various climate control options,
or infotainment system functions. This is an area
Jeep needs to watch. Things have to get better
in the interior to keep up with your competitors. So I think that even
though the exterior may not have to change that much,
I would say that people still want that nice interior
with all the tech features and the goodies
and all of that. It is also something FCA does
know a thing or two about. Jeep's sister brand
RAM trucks dazzled the world of pickup trucks and
boosted sales in 2019 with its revamped line
of pickups outfitted with widely praised interiors. As competition in SUVs
grows more stiff, companies are looking for ways
to branch out and find new segments that
others haven't conquered yet. For the 2019 model
year, Jeep reentered the pickup truck market with
the Gladiator, which is basically a Wrangler with a
longer wheel base and a bed in the back.
The Gladiator name is a revival of a name Jeep
once used on pickups sold in an earlier era. But apart from launching
so-called white space products that try to
identify needs not yet served by automakers, companies
will happily try to steal some share away
from a dominant player in a corner
of the market. Ford has apparently done
exactly this by bringing back the Bronco name, which
it has more or less positioned as a direct
challenger to the Jeep Wrangler. The Bronco has
garnered praise so far for its design and
innovative approaches to the off road category. For many, many years, Wrangler
has had that pure off road segment
all to itself. It's been sharing
with nobody. And, you know, there have
been there have been certain models that have
come and gone. Now here comes forward
with the Bronco, another heritage inspired product, perhaps
not with the same level of heritage
that Jeep has. Anyone looking for a
real off roader really hasn't had any choice
outside of Wrangler. It's basically Wrangler
or nothing. Now, all of a
sudden there's another choice. But Jeep is doing a fair
bit of innovation of its own in order to keep
up with the times. There is already a mild
hybrid wrangler and the company just released its
first plug in hybrid wrangler for the
2021 model year. You know, I think our
biggest challenge that we were looking at is
the continued improvements in fuel economy that our
government is asking us for, and then the
electrification plan that we've got. Jeep also plans
to resurrect the Wagoneer and Grand Wagoneer names as
three row SUVs, which Jeep currently does
not have. It's beautiful, it's got
the most luxurious interiors that our company
has ever done and certainly that our brand
has ever done. We launched the concept
a few weeks ago. And having those customers reach
out to us with some of their warmth, the
feelings of, hey, you know, my grandfather drove
this or my father drove this, I can't wait
to get one of these things. I can't believe how
nice the interior is. I can't believe you have
three, four wheel drive systems. All of that kind
of stuff is just a really special place
to be. Jeeps latter day practice
of reaching into its history for inspiration shows
that it understands how its own heritage is
an essential part of the brand's timeless appeal. It will need to ensure
that its current and future products live up to
or even exceed the company's legendary
reputation.
