Sergio Marchionne Is Not Happy About Jeep's Sales Decline in 2017
Things aren't looking good for the goal of 2 million sales in 2018.
After several years of meteoric growth reaping the benefits of the crossover craze, Jeep has hit a wall in its sales surge. Automotive News Europe reports that 2017 marked the end of a sales hot streak with worldwide Jeep sales declining one percent to 1,388,208 deliveries versus 1,401,321 in 2016. One percent doesn’t sound like that much of a hit, but it is when you have a goal to sell 2 million vehicles worldwide in 2018.
That’s the goal Fiat-Chrysler CEO Sergio Marchionne had in mind as recently as August of 2017. It was ambitious but seemed somewhat attainable considering the brand sold more than 1.4 million units worldwide in 2016 and has seen steady sales growth since 2009 in which Jeep only sold 231,701 vehicles in the U.S. according to Carsalesbase.com. Growth has been driven by widening the lineup with competitive entries like the sub-compact Renegade and the award-winning Cherokee.
Marchionne has been talking a lot about making Jeep a global brand as crossovers and SUVs rapidly grow in popularity all over the world. He believes that Jeep has done a “lousy job” getting a strong foothold in Europe where the brand saw 3.5 percent growth in 2017 but didn’t see the growth that Marchionne was hoping for. "If you look at the numbers of the Cherokee in Europe, we haven't done right," Marchionne told Automotive News. "I have now run out of patience, so we will get it done."
Only 6,706 Cherokees were sold in Europe in 2017 which is a pretty significant dip from 11,866 in 2016. The number one and two best-selling Jeeps in Europe, the Renegade and the Grand Cherokee, respectively, also declined in sales in 2017. The new Compass, however, is off to a good start in Europe having sold 16,170 units last year.
Jeep’s best shot at hitting its sales goal of 2 million in 2018 is China. Jeep grew in the Asia Pacific region by 36 percent moving 240,901 units in 2017. That number is likely to go up with the introduction of the all-new Jeep Grand Commander three-row SUV expected to make its debut at the Beijing auto show in April.
So if there was growth in China and growth in Europe, albeit small, how did the brand take a one percent hit? Jeep struggled in its biggest market of North America, largely because of slow fleet sales. Jeep scaled back fleet vehicles by 60 percent due to low profits. “We will look to our retail markets and see how much more they can make up [for lost fleet sales],” said Head of Jeep Brand Mike Manley to Automotive News.
Sergio Marchionne does not want to hear excuses and is determined to make Jeep a big player in the global SUV arena. He said if Jeep misses its sales target by 50,000 units, he “will have a private discussion with Manley.” However, if FCA falls short of its operating profit of 9 billion euros, he says he “would have to discuss it publicly with analysts and that wouldn't be a good discussion,” according to Automotive News.
With the new Compass still fresh, the hot-selling Cherokee facelifted, and the iconic Wrangler fully revamped for 2018, Jeep has a pretty good shot at growing this year. And it sounds like there will be hell to pay if it doesn’t.