Why Are Fiat Chrysler's Jeep Sales Soaring?

The old SUV brand is posting its best-ever sales. What's going on?

Jun 11, 2014 at 6:32PM


Jeep's iconic Wrangler isn't all-new, but it's popular: The Wrangler set an all-time monthly sales record in May. Source: Fiat Chrysler.

A decade after the heyday of the big SUV, and 15 years after its annual sales peaked, sales of Fiat Chrysler's (NASDAQOTH:FIATY) Jeep brand are soaring.

Jeep sales were up 58% in May, topping 70,000 for the first month ever -- in fact, Jeep had never before sold 60,000 in a month. 

For the year, Jeep sales are up 49%. What's going on?

The all-new Cherokee is winning new fans for Jeep
For starters, there are more Jeeps now than there were for most of last year.

The old and not-terribly loved Jeep Liberty was the brand's former midsize entry. Production ended in August 2012, but dealers sold down inventory for several months after that. Just over 6,000 were sold in 2013, most at the very beginning of the year.

The all-new Cherokee, the Liberty's replacement, was supposed to hit the market early in 2013. But it was delayed for months while Chrysler chased software gremlins in the Cherokee's new nine-speed transmission. It finally appeared in October, and sales have been brisk. 


It's a face that Jeep purists love to hate. But somebody's liking it: Sales of the new Jeep Cherokee have roughly doubled those of the model it replaced. Source: Fiat Chrysler.

Through May, the Cherokee has racked up 67,095 sales, an increase of 61,201 over the Liberty's sales through May of last year -- enough to give the Jeep brand a 33% year-over-year increase all by itself. (It's also about double the number of Liberties that Jeep sold through May 2012.) 

The Cherokee's styling hasn't exactly evoked joy from Jeep purists, but it has hit a sweet spot in the market. Crossover SUVs are white-hot at the moment, and the Cherokee gives off an approachable crossover vibe, along with the sure-footed off-road competence that comes with the Jeep brand. It's a winning combination.

But it's not all that is working for Jeep at the moment.

An old model gets more Jeep-ness
Jeep purists may hate the new Cherokee, but they have to be pleased with how the Jeep Compass has evolved over the last several years. Fiat Chrysler shareholders should be pleased, too: Aside from the all-new Cherokee, the Compass' year-over-year sales gain is bigger than any other Jeep model's.

Originally designed as a "soft-roader" without serious off-road hardware, the Compass' arrival in 2007 was widely derided as a sellout moment for the brand. With somewhat cutesy styling, and a glaring lack of a "Trail Rated" version, the Compass floundered, selling fewer than 40,000 units in 2007 and falling drastically from there.


The Jeep Compass was derided when it was first introduced, but it has evolved into a proper Jeep -- and sales have boomed. Source: Fiat Chrysler.

Jeep sold just 15,894 Compasses in 2010. But it unveiled a sharp redesign for 2011. Gone was the cutesy look; instead, the new Compass looked like a smaller Grand Cherokee. The interior was much-improved, and -- finally -- Jeep made a Trail Rated version available.

That rework did wonders: Compass sales rose to almost 48,000 in 2011. A big update for the 2014 model year brought a refreshed design and a new automatic transmission that improved fuel economy and performance. 

Now Jeep can advertises the Compass as "the most capable compact SUV off-road and in all weather conditions." Buyers have noticed: Sales are up 28% this year, while sales of Ford's (NYSE:F) rival Escape are flat through May. 

The right brand at the right time with the right products
The larger takeaway regarding Jeep's success is this: SUVs are very hot at the moment, Jeep is the SUV brand, and -- for the first time in a while -- the brand has a complete lineup of competitive products. 

The result is a big increase in sales, which isn't a surprise when viewed in context. But it's a testament to just how far Chrysler's products have come in the last few years, and it bodes well for the aggressive global expansion of Jeep that is the cornerstone of Fiat Chrysler's ambitious five-year plan.

Warren Buffett's worst auto nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

John Rosevear owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers