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Can Jeep Bust Out Of Its Rut?


Crowds at the Detroit auto show on Jan. 9 got a few hints about Jeep's future when Chrysler Chief Executive Dieter Zetsche helped tug the covers off a pair of concept vehicles. The wacky, dune-buggyesque Hurricane shows that nothing is sacred in Jeep's quest to assault new SUV turf. And the blocky, in-your-face Gladiator sport-utility pickup aims to remind consumers of Jeep's battlefield cred, stretching back to the WWII Willys Jeep, and to wrest back the macho-military mantle from General Motors Corp.'s (GM) Hummer.

It's all part of DaimlerChrysler's plans to rev up the Jeep brand. Having already set Chrysler back on the road to prosperity with popular new cars and minivans, the German-U.S. giant sees the potent Jeep brand as the next obvious place to boost sales. Over the next three years, it will more than double Jeep's lineup, launching a big, rugged people-hauler, and a couple of smaller, car-like models. Two years ago, Zetsche vowed to build the group's sales by one million units in a decade. Says the CEO: "Jeep is an important part of that."

No doubt Jeep has room to grow. However, to help meet Zetsche's target, the brand faces big challenges. By offering up smoother-riding, car-like models, Jeep runs the risk of muddying its rough-and-ready rock-crawler image. Then there is the danger that the SUV wave has crested; gas-guzzling behemoths are losing sales and require big rebates.

Jeep has a lot of catching up to do. Since 1992's launch of its wildly popular Grand Cherokee midsize SUV, 45 new sport-utes have joined the field. Jeep grabbed nearly 30% of the SUV market a decade ago, with sales of roughly 408,000 Jeeps spread across three models. The SUV market has since doubled to 2.8 million vehicles a year, but last year Jeep sales just topped 427,000 units, for a 15.4% share -- still with just three models. "It's almost criminal what the previous management didn't do," says John Wolkonowicz, an analyst at researcher Global Insight Inc. "How could you freshen Sebrings and Neons and all but ignore Jeep?"

"OUR FAIR SHARE"

Now Jeep is ready to start filling in the blanks in its lineup. This fall, Chrysler will roll out the Commander, the brand's first contender with three rows of seating, an increasingly popular feature. A fully loaded Commander with a V-8 Hemi engine could go for $43,000 or so, analysts speculate. Though that segment is crowded, Jeffrey A. Bell, vice-president of marketing and product planning for Jeep and Chrysler, says: "We're confident that the Jeep is a brand with so much equity that when we enter a segment, we will get our fair share or more." Maybe so, but rising gas prices have dented sales of some larger SUV rivals, such as the Chevy Suburban and Ford Expedition, forcing auto makers to slather on the incentives.

Jeep will also need to tread carefully at the opposite end of the SUV spectrum. It hopes to capture new customers in a couple of years with sport-utes that are smaller and nimbler. It may even go so far as to make these models look like boxy station wagons -- harking back to the squared-off Grand Wagoneers of earlier decades. The trick will be to keep these "soft-roaders" from undermining the macho image of Jeep's off-roaders. Chrysler says the answer is smooth-riding Jeeps that can still tackle tougher conditions than their rivals -- a compelling marketing ploy even for folks who never veer from the pavement. Says Zetsche: "The speculation that we are going soft or doing stupid things to Jeep is untrue."

And it's not as though Jeep is suddenly going to become the American equivalent of mild-mannered Subaru. Case in point: the hulking Gladiator concept, which looks as though it could flatten a cute-ute Even rivals offer grudging praise. Says Robert A. Lutz, GM vice-chairman and a former Chrysler president: "It's clearly the direction Jeep needs to go." The only question is whether it is going there too late.

By Kathleen Kerwin, with David Kiley and David Welch, in Detroit


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