Editor’s Note: Peter delivers more blistering High-Octane Truth about how flat-out greed can consume car companies whole in this business, with Jeep in the crosshairs. In On The Table, Toyota’s CALTY Design Research shows us a Baby Lunar Cruiser concept (BLC) just to see if we’re paying attention, apparently. And Honda previews your lawn-mowing future, and no, we’re not kidding. Our AE Song of the Week is a perennial favorite, Bryan Adams’ ‘Summer of ’69.” In Fumes, Peter continues with “Part IV” of his intriguing series – Famous Front Rows – highlighting various races and the legendary drivers who were front-row qualifiers. And finally, in The Line, we have results from F1 in Qatar, along with results from the Charlotte Roval and the Trans Am from VIR, with 17-year-old Connor Zilisch winning his series debut. Wild. We’re on it. -WG
By Peter M. DeLorenzo
Detroit. Perusing the usual end-of-month sales reports from the auto companies is not something I spend much time doing; it’s like watching paint dry for me. In fact, my eyes usually glaze over about a couple of minutes into it. Last month Ford, GM, Kia, Honda and Toyota all posted significant sales gains. Improved inventories certainly contributed to the upswing, as well as expanded incentives, fleet sales and the continued robust deliveries of light trucks.
All well and good, I guess, but there was one result that caught my attention: Stellantis is struggling, big time. According to several reports from organizations specializing in such statistics, third-quarter volume slipped 1.3 percent for the automaker, with its two biggest brands, Ram and Jeep, posting declines of 3.5 percent and 4.2 percent, respectively. And then there was this: Jeep volume has now dropped for nine consecutive quarters.
Say it ain’t so, Carlos, the Stellantis CEO who seems to be detached from reality more often than not. And say it ain’t so, Olivier “I’m a genius just ask me” Francois, the Stellantis marketing guru who loves basking in the glow of his own press hits. I will give ol’ Olivier his props in this regard, however. His advertising work on Jeep’s behalf has often been on-target and creatively exceptional, including his latest work that debuted last month for Jeep. (Watch it here -WG.)
But nine consecutive quarters? That’s some kind of slide for a heretofore can’t-miss, gold-plated money machine. We’re not talking about just another car company here, because Jeep is one of America’s iconic automotive brands, and it perennially occupies – along with a very few others – the top rung of our AE Brand Image Meter every year.
The reality for Jeep is that once the previous iteration of the Hummer brand fell due to bankruptcy, it has had smooth sailing in this market. (Make no mistake, the previous iteration of Hummer made huge inroads to Jeep’s reputation, but once it was put on the shelf, Jeep had no known predators left to contend with.)
And sail through the market Jeep did. Every variation and expansion of its vehicle portfolio thought of by Jeep marketers was spun into marketing gold. It was a gravy train that showed no signs of slowing either, as the hardcore off-road Jeep faithful were joined by hordes of suburbanites looking for “rugged” cred in order to show off at Home Depot and other suburban mainstays on Saturday afternoons.
The result? Huge profits from eye-opening sales numbers added up exponentially, month after month. Jeep marketers were on cruise control, convinced that the good times would never end. And it was all good. Until it wasn’t.
What happened? Two things. First of all, Jeep had serious competition for the first time in more than a decade. The Ford Bronco, even though it was excruciatingly late to market and suffered – and continues to suffer – from serious production flaws, is a major league swing at Jeep’s formerly impenetrable lofty perch in the market. And Ford’s raucous horse is making substantial inroads on Jeep’s turf.
Secondly, and most crucial to this discussion, Jeep marketers and Stellantis as a whole got greedy with Jeep pricing. Taking a page out of the most usurious option list in the business – pioneered and honed by The Greed Merchants at Porsche – Jeep started adding huge markups for the “privilege” of driving a Jeep, and lo and behold, it’s negatively affecting the brand in the market.
Take the Jeep Wrangler, for instance. I went to the Jeep website and priced out what was, for me, a Jeep I might be able to live with. (No, not the 392, which is probably the only Jeep I’d even consider, but with a base price of $90,590 – gulp – that’s a hard no.) So, I priced out a 2024 Wrangler 4-door Rubicon 4xe, which starts at $63,185. Yes, you read that correctly. After building one out, my total came to $71,060 plus the usual extra whatevers. Then, I priced out a 2024 Wrangler 4-Door Rubicon X, and it came out to $72,350.
We’re talking Jeep Wranglers here. Ouch, baby. Can you spend less? Yes, of course, but the pricing of the Wrangler is constructed such so that you will have to spend a lot to get into one that you’d actually like to live with. And I’m not even talking about the luxury push that the brand is undertaking, with its $100,000+ Grand Wagoneers.
Is all of this sustainable for Jeep? Nine consecutive down quarters suggests that it isn’t. I have seen flat-out greed consume auto manufacturers over the years, and the formula is always the same, which goes something like this:
Initial success x an over-optimistic expansion of a brand x wildly aggressive pricing = diminishment of a brand and ultimately, certain market disaster.
Jeep finds itself in the crosshairs of a bad situation caused completely by its own flat-out greed. If Jeep operatives aren’t careful – and don’t wake up and change course – they won’t be able to extricate themselves from this downward spiral.
And that’s the High-Octane Truth for this week.