Bloomberg News

Chrysler Risks Fury of Faithful With New Jeep Cherokee

March 27, 2013

Chrysler Risking Fury of Faithful With New Jeep Cherokee

The new 2014 Jeep Cherokee is aimed at a global audience and gives Chrysler Group LLC an updated product as SUVs take on a more car-like appearance. Source: Chrysler Group LLC via Bloomberg

Chrysler Group LLC is bringing back the Cherokee, the model that helped usher in the age of the sport-utility vehicle, with a design that’s testing the devotion of the Jeep faithful.

The Cherokee, which debuts today at the New York International Auto Show, is a break from the boxy Jeep Liberty it replaces. Where Jeep touted Liberty’s “rugged off-road capability,” it boasts Cherokee’s 41 percent mileage improvement and non-rugged, on-road touches like parallel park assist and adaptive cruise control that uses radar and video sensors to keep a safe gap between cars.

The new Cherokee is aimed at a global audience and gives Chrysler an updated product as SUVs take on a more car-like appearance. Chief Executive Officer Sergio Marchionne, who also leads Chrysler’s majority owner Fiat SpA (F), wants to expand Jeep’s worldwide presence by adding production in China, Russia and Italy. Chrysler expects to sell 800,000 Jeeps this year after selling 701,626 in 2012.

“This is a product that, to some extent, Chrysler had to do,” said Rebecca Lindland, an automotive consultant with Rebel Three Media & Consultants in Cos Cob, Connecticut. “Of course, there are some people who are just horrified by the product. But you have to factor in what’s happening now and in the future,” including government mandates for fuel economy.

The Cherokee is also debuting as competitors such as Ford Motor Co. (F:US), Honda Motor Co. and Toyota Motor Corp. feature more car-like crossovers where buyers rarely take their vehicles off road.

‘Jeep Capability’

For Fiat to reach its goals with the brand, it needs to improve sales from what Liberty achieved, Mike Manley, president of the Jeep brand and head of Chrysler Group’s international operations, said in an interview today. Jeep replaced the Cherokee with the Liberty in 2001 while keeping the Cherokee name outside North America.

“For an SUV brand, I can honestly say it’s one of the most important segments available to us,” he said. “As much as we loved Liberty, it was a real niche player. When I think about opportunities for us to continue our growth from last year, this segment really provides that.”

Count Chris Permar among those who will miss the old Liberty. Permar, a Wilmington, Delaware, union pipe fitter and photographer, parks his black Liberty on the soft sand at Lewes Beach, where he fishes for flounder and rockfish.

“I love the look of my Liberty,” Permar, 49, said in an interview. “That beefy, tank-like look? I like that. I truly take it up on the beach. It’s what it’s for. You know what I mean?”

Jeep Sales

Chrysler has posted 35 consecutive monthly U.S. sales gains, matching the company’s longest streak, which ended in December 1994. It was the only major U.S. automaker to gain share in its home market last year, and it needs the Cherokee for Jeep to keep pace: It’s the Auburn Hills, Michigan-based company’s only brand that has lost sales so far this year.

Chrysler sold 474,131 Jeeps in the U.S. last year, about 80,000 below the brand’s 1999 peak. Cherokee, introduced in 1974, was a hit. After a 1984 redesign, it sold more than 100,000 models a year globally from 1986 through 2001. Liberty was introduced in 2001 and quickly became a stalwart of the lineup. Liberty represented 16 percent of U.S. Jeep sales in 2012, trailing only the large Grand Cherokee SUV and the rugged Wrangler.

‘Cute Utes’

While Liberty’s design languished in recent years, the segment moved ahead with more aerodynamic redesigns and car- based platforms.

Ford revamped the Escape for the 2013 model year, joining a crowded field of “cute utes” that includes the Honda CR-V, Toyota RAV4, Mazda Motor Corp. (7261)’s CX-5 and Hyundai Motor Co.’s Tucson. Honda sold 281,652 CR-Vs last year, Ford, 261,008 Escapes and Toyota had 171,877 RAV4 deliveries.

Some buyers want the benefits of a larger SUV in a more manageable package, Ralph Gilles, who oversees product design for Chrysler Group, said in an interview.

“We wanted to have something that would compete with the core of the market,” Gilles said. “Liberty is not as current as it needs to be for the times. The new Cherokee is a complete rethink of an offering in the segment.”

The 2014 Cherokee, which shares architecture with the Dodge Dart compact car, arrives in the showrooms in the third quarter. Mileage tops out at 31 miles (50 kilometers) per gallon, compared with 22 for the Liberty. That’s an increasingly important feature as the U.S. is requiring automakers to double their corporate average fuel economy, known as CAFE, to 54.5 miles per gallon by 2025. The company has not disclosed Cherokee pricing. The 2012 Liberty starts at $23,395.

Balancing Priorities

The Cherokee will retain a lot of the functionality of the Liberty, Gilles said.

“That’s going to be the surprise,” he said. “Everyone assumes to be a compact crossover, you have to give these things up. I think they’ll see the engineers and the brand guys at Jeep did a fantastic job balancing both.”

Early notices are positive.

“Gone is the iconic boxed cabin and in its place is a swoopy, aerodynamic profile shared with most current midsize crossovers,” Edmunds.com said in a March 22 review.

Patrick Foster, who wrote the 1998 book “The Story of Jeep,” used to sell Jeeps at a dealership in Derby, Connecticut, in the 1980s.

“I don’t see an awful lot of former Jeep in the Cherokee and I think that’s good,” Foster said. “It should ride and handle better. It feels a little more athletic. And it’s more car-like than Liberty was. That was the failing. It felt like a big, heavy truck.”

Good Change

Moreover, Jeep usually has succeeded when it has stepped outside its comfort zone, Foster said. Jeep fans hold fast to classic Jeep style touches, such as round headlights and a flat, seven-slot grille. With the new Cherokee, the seven-slot grille isn’t flat and follows the curved contour of the front and the headlights aren’t round. Foster remembers the uproar from the fan base when Jeep when the Wrangler replaced the CJ in the late 1980s.

“There was always a lot of push-back, but it brought a whole lot of new people into showrooms,” he said. “It really expanded the brand.”

To contact the reporter on this story: Mark Clothier in New York at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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