Jeep Is Absolutely Crushing the Auto Industry. What's Behind the SUV Brand's Resurgence?

Jeep brand sales are soaring behind three key models, but what does the road ahead look like?

Aug 9, 2014 at 1:01PM

2014 Jeep Grand Cherokee. Source: Fiat Chrysler Automobiles.

During the Great Recession, when gas prices soared and the economy tanked, Americans decided it was time to trade in their gas-guzzling and road-hogging SUVs. It was a decisive and quick decline for the SUV segment's popularity, which was a crippling blow to Detroit automakers' sales and profits.

Fast-forward to today, and smaller and more fuel-efficient SUVs and crossovers are winning back American drivers. One brand is taking full advantage of the change of heart: Jeep. Here's a look at what's driving Jeep's success, where the brand is going from here, and why it matters for Fiat Chrysler Automobiles.

By the numbers
To say that Fiat Chrysler Automobiles' Jeep brand is crushing the market is a complete understatement. When measured against the U.S. automotive industry's 9.1% increase in light-vehicle sales through July, compared to last year, Jeep's 44% gain during the same time frame is astonishing. Jeep even trounced the 11.8% gain of the entire SUV and crossover segment, which has been one of the fastest-growing segments recently. 

Here's a look at Jeep's year-over-year gains each month this year:

Chart by author. Information source: FCA monthly sales releases.

Furthermore, Jeep hit multiple milestones in May as Jeep sales topped 70,000 for the first time ever. It was also the third consecutive month that the Jeep brand set its all-time monthly record for sales -- pretty impressive stuff. 

So, which vehicles are driving these massive gains, and are these results here to stay?

*2014 is projected from sales through July; 2013 Liberty/Cherokee sales are combined during model transition. Source: FCA sales releases.

As you can see above, three vehicles drive the vast majority of Jeep's sales: the Grand Cherokee, Wrangler, and Cherokee. In fact, this year through July, those three vehicles account for nearly 80% of Jeep brand sales in the U.S. market.

With those three vehicles being a critical component for Jeep's success, will sales remain strong? Does it matter?

Jeep's Grand Cherokee had a mid-cycle design refresh in early 2013 and will have another in late 2015, which should keep car buyers hooked on the popular vehicle. The Cherokee launched its all-new design in 2013, replacing the Liberty nameplate, and it will have a mid-cycle refresh in mid-2016; fresh designs sell best, and these updates will easily enable the Cherokee to continue its surge in popularity. 

The Wrangler is a slightly different story and won't receive any attention until its all-new design hits the markets in 2017.

Furthermore, FCA has put 2.9 billion euros of investment between manufacturing and product to aid in launching five new Jeep models, eight vehicle refreshes, and 47 limited editions between 2009 and 2014. In addition to that investment, FCA's end goal for Jeep is to reclaim the title of No. 1 SUV brand in the world by the end of the decade.


2015 Jeep renegade. Source: Fiat Chrysler Automobiles.

The road ahead
Jeep could accomplish its global ambitions by expanding production capacity to enable it to reach distant markets in larger vehicle volumes. Jeep will also fine-tune its sales strategy by replacing its Patriot and Compass models with an all-new SUV in 2016. It will also introduce the Jeep Renegade in North American markets to become the smallest offering in the product lineup, and an all-new Grand Wagoneer will hit the roads in 2018.

Ultimately, the future at Jeep looks bright as FCA continues to pour investments into the brand, aiming for it to become the automaker's future global cornerstone. As Jeep's most important models continue to surge due to America's rekindled love for SUVs, and critical Wrangler and Grand Cherokee redesigns inch nearer, look for Jeep brand sales to continue moving higher.

Both Jeep's current success in the U.S. and its future global potential will be critical factors when investors consider buying shares of FCA during its initial public offering on the New York Stock Exchange later this year. If Jeep falters, so will Fiat Chrysler -- but that doesn't look likely.

Warren Buffett’s worst automotive nightmare
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 ride this mega-trend. Click here to access our exclusive report on this stock.

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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information