In lightening speed the new Jeep Cherokee became one of FCA’s best-selling nameplates. In 2014 the brand was able to sell 236.289 units of this mid-size SUV all over the world at 4th position in the FCA ranking by models, right after the RAM Pickup, the Jeep Grand Cherokee and the Fiat 500. When it was introduced the Cherokee was a hot topic in many car blogs and forums due to its design. Many people dislike its look saying that it hasn’t anything to do with the previous Cherokee generations. The negative critics populated the web in North America and Europe. However, when the Cherokee went on sale in the US and Canada, sales figures showed a different performance. Soon the new Jeep was part of the best-selling SUVs and by the end of 2014 it was the second best-selling D-SUV in USA with 11,7% segment share (against 2,41% in 2013 for the Cherokee and Liberty combined). Americans like this Jeep while FCA is pleased with its results due to the fact that it contributed to the brand’s record of selling more than 1 million units. Last year USA counted for 76% of the Cherokee sales surpassing the Grand Cherokee US market dependance (66%). Canada was another important market with 10% share. But how did it work in Europe? did the new FCA group helped to achieve better results there?
FCA decided to present the Cherokee at 2014 Geneva motor show in March. Thus the car went on sale some weeks after in most of Europe with Italy playing as a “local market”. In 8 months Jeep was able to sell 8.681 Cherokees all over Europe (UK included, Russia and Turkey excluded). That’s a big jump compared to 2013 figures with only 425 units. But is it enough? last year the whole D-SUV segment sold 331.026 units in Europe, which means that the Cherokee counted for only 2,62% of that. It occupied place number 12 in the ranking behind all the premiums (even the new X4), the Mitsubishi Outlander, Nissan X-Trail, Hyundai Santa Fe and Kia Sorento. Considering that its sales relied on Fiat sales force (many of Jeep dealers are shared with Fiat and Alfa Romeo) the Cherokee could have done much better. The low numbers are mainly explained by the poor performance in Germany (1667 units), France (854) and Spain (490). In Italy the brand sold 2025 cars. All of these numbers are quite low when compared to its rivals: the Audi Q5, BMW X3, Mercedes GLK and Volvo XC60. As the company wants to position the brand as premium choice, the Cherokee has the hard task of competing with the image and awareness of the Germans and Volvo. And that’s where the problem is.
In North America Jeep is known for its tough cars and for its “real-SUV” image. When costumers think of getting a real 4WD car, most of them think of a Jeep. Inside the brand the different nameplates follow a specific target but all of them share the same values: an affordable real SUV to use it in the city and anywhere out of it. The brand isn’t positioned as a premium alternative as most of Americans have grown with the idea that Jeeps must be not only capable but also affordable. The only exception is the Grand Cherokee which has been improved in the last years to become a semi-premium SUV but again for the masses. This formula works: Jeep outsold GMC and is quite ahead of all other SUV divisions of other car makers. It is not the case in Europe where the brand is intended to compete not with the mainstream brands (Hyundai, Toyota, Mitsubishi for instance), but with Audi, BMW and Mercedes. The Grand Cherokee is a good example that it can do it (it was the best-selling E-SUV in Europe last year) but not the other products. At this point the success of the Grand Cherokee would be better explained from the product point of view instead of the brand’s. The problem is that the brand’s awareness isn’t as high as the Germans’ so when buying a premium mid-size SUV, most of the people think of a Q5, X3, GLK or XC60. Before it becomes a real premium alternative, Jeep must work harder to increase the level of awareness and improve its image. Even if the Cherokee features several premium accessories, and it could be a perfect rival to the premiums, Europeans don’t know it. Therefore if Jeep wants an important place inside the premium segment it should first work on the awareness/image while it offers more competitive prices. Then it could easily beat the Germans with more expensive real SUVs.
Main reasons why the Cherokee is not success in Europe (not taking into account its controversial looks) using Belgium as an example:
– Too small dealer network. Even in some highly populated areas, the closest dealer is up to 50 km away. In a densely populated country like Belgium, this is acceptable for a Maserati dealer but not for Jeep.
– The too high price. the Cherokee is not a premium product, it is half-premium at most. In the US, a Ford Edge starts at 22960$, the Volvo XC60 starts at 36400$ and the the Jeep Cherokee starts at 22995$. In Belgium, (not taking into account rebates) diesel versions (which counts for almost 100% of the sold SUV’s in this class) of the Kuga start at 28050 €, the XC60 starts at 34950 € and the Cherokee starts at…36900€!
Taking into account these 2 facts, I am surprised I see them around quite often, but: there is a Jeep dealer at less than 10 km from where I life and thanks to rebates, current prices start at 29990 €.
@Jeep: Get your sales network on order and drop your list price to a more realistic level and your sales numbers will increase.
Just my 2 cents.
I absolutely agree. Reason for unsuccessfull new Cherokee in Europe is simply very high price comparing to rivals in segment, and after that brand awareness. Grand Cherokee is successfull for the oposite, it is much cheaper than the rivals from premium E SUV.
Perfect J.F.! Great article as always!
Alexander and Dowie, good job guys! Good tips from you!
Good tips Guys!
J.F. Good good good job as always!
It isn’t clear that the production+import tariff-ed costs of the Cherokee would allow the big price cuts you suggest. I suspect that since the car is engineered even in non-Trailhawk form to be a proper SUV makes it expensive to build, relative to the very un-tough-SUV demand in Europe. For eg., the German SUVs, even the M class probably, cannot begin to match the Cherokee’s toughness and suspension chops.
In that sense, Europe is I believe a soft, crossover market , which leaves the Cherokee awkwardly positioned and priced.
Is not the Renegade better suited to Euro tastes and budgets (by design)? Is not the Cherokee only incidentally for Western Europe and more for Nafta, China, Australia, Russia and the Middle-East?
IMO, Jeep would be better served spending greater resources on building demand for its distinctive tough-yet-luxurious SUV-truck i.e., American, image via marketing and promotions, rather than reducing prices?
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Jeep needs to look at JLR’s brand positioning of Land Rover and Range Rover. It is the only direct rival to Jeep, in fact the original LR was designed off the original Jeep.
Idea would be to use Wrangler as a stand alone brand competing with Defender, Then have the Jeep names for Renegade, Compass, Cherokee, to compete with Discovery, as a family/leisure brand this would leave the Grand brand to be the upmarket luxury brand.
Forget about the German premium brands for Jeep and use jacked up car platforms for Chrysler, Maserati, and Lancia as competitors for the premiums. Jeep should not be soft roaders, leave that to the other brands in the portfolio.
I think problem of FCA globally,is to reduce logistic transport and distribution costs for some areas/ middle east,Asia Pacific/.for ex.
Second needs a better IMAGE strategy,and finally to have a REVALUE PLAN,separetly but effective with NEW model for brands like LANCIA and MASERATI and soon as possible in the quick segmentation could envelope the automarket in the next future.
You have posted a nice and informative article named USA AND EUROPE: THE 2 SIDES OF THE JEEP CHEROKEE, I learn a lot from your post. Go ahead, keep up the good work.