Jeep prices have gone through the roof. Buyers are bailing and dealers are furious

By Chris Isidore, CNN

New York (CNN) — The Jeep Gladiator was unveiled to great fanfare by then-owner Fiat Chrysler in 2018, the first pickup model for the hot brand in more than a quarter of a century. And at first it seemed like it might live up to the hype.

After rolling out in 2019, sales doubled in 2020, reaching nearly 90,000 in the US despite pandemic-induced production issues and making it one of the few winners that troubled year.

But the success was short-lived.

After Fiat Chrysler’s merger with PSA Group in early 2021 created Stellantis, the company began focusing on higher-priced, higher-margin vehicles, using limited supplies of parts such as computer chips to build the pricier versions of its vehicles. That left many traditional Jeep and other Fiat Chrysler buyers looking elsewhere.

A search of Jeep’s site shows only a few Gladiators with a sticker price below $40,000 nationwide, none for less than $39,790. Sticker prices for some Gladiators on dealer lots now go as high as $72,000.

Gladiator sales have fallen steadily from the 2020 peak as a result and are down another 21% so far this year. Jeep overall has become a shell of its former self, with sales down 36% from before the pandemic. Stellantis managed to turn off customers to what was one of the hottest and most desirable brands by jacking up prices and mismanaging its lineup.

The problems at Stellantis are not limited to Gladiator or even to Jeep. The Ram truck brand has also struggled to keep up with truck offerings from General Motors and Ford. Dodge has cut some of its popular models in anticipation of electric versions. Chrysler, once the company’s core brand, is essentially down to one model, the Pacifica minivan, arguably the weakest segment of the US market.

The day after the US presidential election, Stellantis announced it would cut one of two shifts at its Toledo Assembly Complex South plant, which builds the Gladiator, indefinitely laying off about 1,100 workers.

“These are difficult actions to take, but they are necessary to enable the company to regain its competitive edge and eventually return production to prior levels,” said the company’s statement.

Stellantis customers hit the wall

Virtually every model sold by Stellantis is showing double-digit year-over-year sales declines, as high prices left dealer lots jammed with inventory.

By the fourth quarter of 2023, the average Stellantis vehicle sold for $58,000 in the US, according to data from Edmunds, by far the highest in the industry. While Stellantis’ average price has declined since then, it was still the second highest average price in the industry, at just under $55,000 in the third quarter. That was just behind Ford Motor, including its luxury brand Lincoln.

And the problem is felt even more acutely among typical Jeep buyers.

Traditionally Stellantis buyers had lower credit scores, which increased their auto loan interest rates and limited their spending power, said Jessica Caldwell, head of industry insights for Edmunds. Those buyers have struggled to keep up with Stellantis’s higher prices.

“They just can’t afford this,” she said. “That’s the wall they’re hitting. Fundamentally they have a product mismatch for the market.”

“They moved to a price point that’s too high for their typical customers,” added Charlie Chesbrough, senior economist for Cox Automotive.

Stellantis also said it would lay off about 1,200 workers at its Warren, Michigan truck plant, coinciding with the discontinuation of the entry-level Ram 1500 Classic pickup. The elimination of a shift at that plant took effect last month.

Dealers and workers both furious

Three months ago, the head of Stellantis’ dealer association, Kevin Farris, wrote an open letter to CEO Carlos Tavares.

“We are writing this letter on behalf of the entire US dealer network and its employees,” the letter began. “The intent of this letter is to sound an alarm – an alarm not only to you, but to the Stellantis board of directors, your employees, your investors, and suppliers.”

The Stellantis National Dealer Council had been pleading with the company behind the scenes for two years already, the letter said. The company was headed for disaster – not just for the dealers themselves, but for everyone involved.

“Now, that disaster has arrived,” the letter said.

The company’s relentless focus on short-term profits for 2023 had devastating consequences for Stellantis, Farris wrote. Market share had been slashed nearly in half. The share price was falling. Plants were closing. Thousands were being laid off. Key executives were “fleeing” the company.

“Everyone will suffer the consequences of these disastrous choices,” the letter said.

In response Stellantis issued a statement saying said it took “absolute exception” to Farris’ letter, saying it has taken steps to reduce excess inventory, and that sales were improving in the latter part of the third quarter as a result.

“We don’t believe that public personal attacks, such as the one in the open letter from the NDC president against our CEO, are the most effective way to solve problems,” said its statement.

The company’s workers are livid, too.

The United Auto Workers union is considering a new strike at Stellantis. The company isn’t living up to the contract, the union alleges. Stellantis, for its part, denies the accusation, and says it will fight any new strike.

Farris told CNN that some changes since his open letter, including executive shuffling, are helpful, but that dealers are still concerned. He said cutting jobs and production is a bad idea.

“You don’t get output by shutting plants,” he told CNN in an interview. “You’re not going to cut your way back into a better situation.”

While Farris said he’s concerned about Stellantis overall, the Gladiator also has specific problems with its price and SUV-like design that limit its appeal

“That was never intended to be high volume product,” he said. “Personally, I’d love to see them produce a smaller size pickup for the Ram brand so we can compete for bulk of the market.”

And that’s a problem with Stellantis overall. It no longer has the vehicles that it once could offer to the more entry level buyer, such as the Challenger muscle car, the Cherokee SUV, the Renegade subcompact SUV and the Chrysler 300 sedan.

“It’ll be hard to get back the market share they had,” Farris said. “A lot of the products we used to sell a lot of are not being produced today.”

The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.