Jeep takes starring role in Stellantis

Bigger ship, same anchor.

While plenty of questions linger about how Fiat Chrysler Automobiles and PSA Group will intertwine as they merge into Stellantis this week, one thing is clear: Jeep will be a top priority, whatever its parent company is called.

The adventure brand will remain a force in the U.S. and make more inroads globally as a cornerstone of Stellantis, with an onslaught of products designed to take Jeep upstream and into new segments as dealers increasingly spend millions of dollars to build flashy Jeep-only showrooms.

That was evident with the debut of a three-row Grand Cherokee, a first for Jeep's top-selling U.S. nameplate. The Grand Cherokee L, which has a premium interior and fresh styling, puts the SUV on the radars of those in search of more space.

And it might turn heads in markets outside the U.S., including the Middle East and Australia, where three-row models are popular, said Christian Meunier, Jeep's global president. A redesigned two-row version, which will have a hybrid variant, is expected to reach the brand's roughly 2,400 U.S. dealerships in the third quarter.

"We think the potential of Jeep is not optimized yet. I think there's still a lot of room for us to grow," Meunier told Automotive News. "The three-row expansion for Grand Cherokee is a big step. The Grand Wagoneer [and] the Wagoneer, another step. The electrification of Jeep — really another way to expand the brand and to make the brand even sexier than it is today."

Meunier said he sees "an opportunity to broaden our appeal to people today that like Jeep but are not considering Jeep." The goal is "to make Jeep bigger without diluting the brand and the DNA," Meunier said. "That's core to it."

Jeep has been core to FCA, which nurtured the SUV brand from what had been the smallest of the three Chrysler brands when DaimlerChrysler unraveled 14 years ago into the sixth-largest make in the U.S. Beyond Jeep and the hugely profitable Ram line of pickups, the postmerger future is not nearly as clear for other FCA brands — particularly Chrysler, Alfa Romeo and Fiat.

The tie-up falls in line with the vision of former FCA CEO Sergio Marchionne, who was vocal about the need for industry consolidation before his 2018 death.

But challenges could emerge early on as Stellantis deals with a slowed global economy still confronting a pandemic. If the vehicle market remains stable, this year should be fairly quiet for the company before it starts exploring "operational synergies" in the second year, said Daron Gifford, leader of the automotive practice at business advisory firm Plante Moran.

Things could get rocky if the health crisis drags on or worsens, Gifford said, and necessitates major organizational changes.

"We finished the year pretty strong here, so if there's something that occurs, either pandemic or otherwise, and volume started to tank, the auto industry is very fragile," Gifford said. "Once it kind of goes below a certain breakeven point, the losses get pretty catastrophic quickly because they have such a high fixed-cost structure."

Stellantis will begin its run with PSA Group head Carlos Tavares as CEO and FCA CEO Mike Manley overseeing North and South America.

Manley's role will be to "set the tone" of the development of Stellantis in those regions, said Bernardo Bertoldi, a professor at Italy's University of Turin who has studied FCA's corporate structure.

For dealers wary of yet another merger, the retainment of Manley's leadership in the region comes as a relief.

David Kelleher, chairman of FCA's dealer council, said Manley understands dealers and knows the Americas "inside and out."

"That kind of stability is terrific," Kelleher said. "Mike's a great leader in that fashion. Tough but smart, and challenging, but he executes well. That was a kind of unknown. Nobody knew where Mike was going to end up, and where he ended up, I think, is wonderful for us."

Kelleher, dealer principal at David Dodge-Chrysler-Jeep-Ram in Glen Mills, Pennsylvania, is confident enough in Stellantis that he's planning to invest around $5 million to add a separate Jeep showroom and build 19 service bays.

Meunier said about 600 dealers have committed to building either Jeep-dedicated showrooms or standalone Jeep dealerships.

"I don't feel like I'm putting myself in any risk at all," Kelleher said. "That's more than just the dealer council guy speaking. That's the dealer speaking, and there are dealers like me doing that kind of investment all over the place."

Both FCA and PSA have overcome major turbulence in recent decades, highlighted by acquisitions and sales swings.

Fiat, led by Marchionne, took over Chrysler in 2009 and stabilized the company with big growth for Ram and Jeep.

PSA, under Tavares, has been eliminating unprofitable sales channels and trimming manufacturing costs. PSA added Opel and Vauxhall to its lineup in 2017 when it bought them from General Motors.

Doug Betts, who formerly held top roles in global manufacturing and quality for FCA, said the company has been through this before and will take it in stride. Betts believes the partners will mesh well, given FCA's strength in North America and PSA's positioning in Europe.

"The culture there very much embraces the partner — at least, that was the experience that I saw," said Betts, who joined Chrysler just after the Daimler partnership ended and now is president of the automotive division at J.D. Power. "I didn't see a lot of hard feelings or things like that."

But Bertoldi foresees some challenges that could arise in the months ahead as the new company adjusts. One, he said, is "being able to lead with agility in a rapidly changing environment" in an industry that was complex before COVID-19.

"Every successful merger creates a new culture, which is different from the original cultures and is a new synthesis," Bertoldi said. "The pandemic will be one of the ingredients which will forge the new culture."