Jeep's Unlimited Hit

After years of limited growth and disappointing new releases, Jeep finally has a sales smash in its all-new, four-door Wrangler Unlimited

by David Kiley

Chrysler has had thousands of gas-hungry sport-utility vehicles—Dodge Durangos, Jeep Commanders, and Grand Cherokees—lined up for acres on an empty parking lot near Detroit Metro Airport, unsold and waiting for dealer orders. The longer they sit in hope of gas prices falling, the more they lose their value.

But one Chrysler SUV is conspicuously absent. The Jeep Wrangler Unlimited, the first four-door version of the Wrangler in more than 60 years, gets a miserable 14-18 miles per gallon. But while Chrysler is bribing customers with thousands of dollars to buy those other SUVs, the new, bigger Wrangler is selling without a nickel of discounts. Dealers who can hardly keep demonstration models on their lots are charging more than sticker price in some markets. And the Toledo (Ohio) assembly line where the SUVs are made is working overtime.

Jeep Marketing Director Kevin Metz says he was recently looking for a Wrangler in a hard-to-find color. "I found six Wrangler Unlimiteds total in the country that weren't sold," he laughs.

New Models Failed to Goose Sales

The success of the new Wrangler in a crowd of unloved gas guzzlers is teaching a company known for taking risks in the design studio that there is rarely a substitute for carefully listening to customers and sticking close to the heritage of a brand.

The Wrangler's roots reach back to the Willys Jeep 4x4, the workhorse of the U.S. military during World War II. Over the decades, the iconic two-door CJ and then the Wrangler remained at the heart of the Jeep franchise and were favorites among off-road rock crawlers, as well as the frat-boy crowd, which has steadily bought the cloth-top convertible for its rugged image. Sales for the past decade have stayed fairly steady at 70,000-80,000 a year.

After DaimlerChrysler's (DCX) German management took over the U.S. operation in 2000, it began charting ways to grow Jeep, which it believed to be the most valuable, though underperforming, brand in the company. They were motivated in part by General Motors (GM), which had acquired Hummer and was planning to start taking on Jeep head to head. Until now, Jeep's results have been disappointing. Despite the redesign of the Grand Cherokee, the replacement of the aged Cherokee with the Liberty SUV, and the addition of the Commander SUV, Patriot, and Compass, Jeep sales remained flat at 460,000 from 2002 to 2006.

With those vehicles, and the addition last September of two small Jeeps priced under $20,000—the Compass and Patriot—the strategic emphasis was on attracting new buyers to Jeep by offering something for everyone. But none of the designs have been met with cheers. The Grand Cherokee and the Commander carry more than $4,000 in rebates. And even the Compass and the Patriot come with $750 in rebates. "Jeep designs, except for the Wrangler, have lacked emotional appeal, and that has been a bad mix with mediocre quality ratings," says marketing and design consultant Dennis Keene.

Approaching the Sacred Wrangler

The two-door Wrangler's design was viewed as almost sacred, and few were willing to tinker with its time-tested success. But in 2002, Jeep designers and engineers attended Camp Jeep, an annual gathering of Jeep owners and devotees who come together in places like Vail, Colo., and Virginia's Blue Ridge Mountains for fishing, rock crawling, camping, and exhibits that celebrate Jeep's military history. At an engineers' roundtable with longtime owners, there was a frequent and sometimes damp-eyed lament by the thirtysomething men there: "I miss my Wrangler." Marriages, suburban homes, and kids had made the small, bouncy off-roader too impractical for too many.