By Peter M. De Lorenzo
Detroit. As we’ve witnessed Fiat’s rescue from the brink of insolvency - thanks to the True Believers at Chrysler – and watched as sales of Jeeps and Dodge Ram trucks (they will always be Dodge Ram trucks) have propelled the newly named “FCA” enterprise to heights never before imagined by the perpetually and historically downtrodden Italian car company, one question is being asked more and more often in insider and “off the record” conversations throughout the industry.
And that is, how long will it last?
Suffice to say you can categorically dismiss any “official” comments coming out of FCA about the company’s upward trajectory because those views are warped by prosciutto-colored lenses, which doesn’t always jibe with the prevailing reality. Besides, to have troops in the trenches openly questioning The All Knowing and All Powerful Leader’s view of the automotive world would not only be sheer folly, it would be bordering on the treasonous.
But I can assure you that the monopoly that FCA has in the market with its Jeep brand – particularly with the Wrangler – is coming to an end, and sooner than most in this industry may think, I might add.
Let’s not forget that at one point not too long ago, GM’s Hummer brand had Jeep fighting for its very life in the market, before the gathering hordes of the politically correct mustered their pitchforks and demanded that Hummer be neutered or eradicated for egregious sins perpetrated against all mankind. And during the GM bankruptcy process, no one in the Obama administration would have been caught dead defending the existence of Hummer, so it was an easy decision to put the brand to sleep.
But imagine what would have happened if Hummer had been allowed to go dormant only for a while, with plans to resurrect it when GM was free of the restrictions that came with the bankruptcy, and the economy pulled out of its tailspin. The H2 had already been killed, the H3 had become the mainstream Hummer, and the H4 – the scintillating concept that took dead aim at the Wrangler and bristled with both more style and vision than the Jeep – was targeted to become a reality. The table was set for Hummer to be an even more formidable competitor for Jeep, and I daresay we would have been looking at a different landscape in the market today, one with an ultra-competitive Hummer brand armed with an array of products – including even smaller vehicles with advanced powertrains (H5 anyone?) - taking the fight right to Jeep at every turn.
That’s not the reality we live with today, however. Jeep remains unchallenged and unfettered by serious competition of any kind, and FCA is raking in cash by the bushel full from the profits. In fact they can’t even count it fast enough. But anyone who thinks that other manufacturers will continue to sit on the sidelines allowing Jeep to have a segment of the market all to itself while FCA blithely continues to suck up the profits is kidding themselves.
There are two manufacturers in the deep planning and development stages to build a direct competitor to the Wrangler as you read this. And a third has taken a program off of the shelf, dusted it off and is now planning to accelerate the development of its own Wrangler beater.
Now, some would argue that there’s not enough money in the segment to justify a new product program investment, but in this era of advanced vehicle architecture orchestration - and the efficiencies that have grown up surrounding the practice - that argument simply doesn’t wash. New thinking, new approaches and new vision – and real competition - are exactly what the segment needs.
Jeep has made the most of its singular opportunity in the market, but as we’ve seen over the decades, nothing in this business lasts forever, and things can change in an instant. “Hot” companies can grow stone cold through a loss of focus, or because the wrong executive got promoted, or from misguided product and boneheaded marketing strategies, or by just simply taking their eye off of the ball.
And no company is impervious to it either.
There’s nothing tougher for a manufacturer in this business to deal with than to have a vehicle segment all to itself - with all of the endless profits that go with it – while at the same time figuring out how to keep the troops motivated, focused and on the top of their game so that complacency doesn’t set in.
And there’s nothing more motivating for other manufacturers in this business than to see a competitor have a direct line to a mountain of profits, without anyone at least giving them a real run for their money.
Jeep is enjoying its moment – and the immense profitability that goes with it – in the sun.
But the competitive storm clouds are brewing, and some major turbulence is about to disrupt the friendly confines out in Auburn Hills.
And that’s the High-Octane Truth for this week.