Fiat Chrysler's (NYSE:FCAU) Jeep brand is expected to add a pickup truck to its lineup soon -- and that pickup will probably be based on the iconic Wrangler.
As first reported by trade publication Automotive News, the historic factory in Toledo, Ohio, that makes the Wrangler will also begin building a Jeep pickup in a few years.
The new truck is expected to be based on the Wrangler and could look similar to the Jeep Gladiator Concept that Chrysler showed way back in 2005. Production is expected to start when the next-generation Wrangler is launched, probably in 2017 or 2018.
The idea of a Jeep pickup may sound odd to some, but it's a great move for Fiat Chrysler CEO Sergio Marchionne. It solves at least two big problems in one stroke.
FCA wants to make more Wranglers -- without expanding its factory
Here's one of those problems: The SUV market is white-hot and Jeep is selling all the Wranglers it can make -- but right now, it can't easily make any more.
The factory in Toledo is one of Chrysler's oldest, and it has long been the home of the model that has become Jeep's flagship. In a sense, it's the symbolic home of the entire Jeep brand. The Toledo factory also makes the midsize Jeep Cherokee, another Jeep model that is selling like hotcakes.
Sales of both the Wrangler and the Cherokee have boomed over the past couple of years. FCA's dealers could probably sell even more of both models, and FCA would very much like to make more. But to make more, FCA would have to expand the Toledo factory, and that's both expensive and politically complicated.
Several months ago, Marchionne floated the idea of moving the Wrangler's production line out of Toledo, to another factory in the U.S. or Canada. But that idea turned out to be even more politically complicated, with Ohio politicians and Jeep loyalists both loudly opposed.
One thing the Toledo factory has in its favor right now is that it's almost certainly very profitable. Auto factories have very high fixed costs: The more vehicles they make, the more profit they generate -- and Toledo is maxed out.
The solution is elegant, not least because it should keep the Toledo factory very busy. Jeep sells around 18,000 Cherokees a month, but a Wrangler-based pickup would likely sell fewer -- 10,000 is probably a fair guess, depending on price and features. The upshot: Dealers get more Wranglers to sell, the Cherokee gets moved to a place where more can be built -- and the Toledo factory gets another profitable product to keep it busy.
A strong potential entry in a suddenly booming niche market
This move also helps Marchionne solve another problem: How to make the most of booming sales of pickups and SUVs.
Midsize pickups were a declining category for years, but lately they've had a resurgence. That's partly because the segment leaders, Toyota and General Motors, have recast their midsize pickup entries as "lifestyle" vehicles -- a sporty-yet-comfortable SUV with a pickup bed, rather than a downsized work truck.
They sell well to folks who want an "outdoorsy" kind of vehicle to drive every day, one that can haul their camping equipment or dirt bikes into the boonies on the weekend every now and then.
That's why Ford is believed to be gearing up to jump into this market with a new off-road-ready iteration of its midsize Ranger pickup. And it's another reason why a Wrangler-based Jeep pickup makes so much sense.
What do you think? Would you be interested in a midsize Jeep pickup that followed the lines of the Gladiator Concept, one that was sized and priced roughly like the Chevy Colorado? Scroll down to leave a comment with your thoughts.
John Rosevear owns shares of -- and The Motley Fool recommends -- Ford and General Motors. 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.