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:
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?
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.
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.
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