Jeep Plans Luxury Model to Target Mercedes SUVs, Range Rover

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Range Rover SV
The Range Rover SV Autobiography vehicle is displayed during the 2015 New York International Auto Show, on April 2, 2015. Photographer: Michael Nagle/Bloomberg

Jeep is developing a luxury sport utility vehicle to rival the Range Rover.

It’s a bold gambit that will test anew the elasticity of a brand that started life selling army trucks in World War II and has so far managed not to alienate hard-core off-roaders. Based on Range Rover prices, a luxury Jeep could command as much as $100,000 and help shore up margins as parent Fiat Chrysler Automobiles NV spins off money-minting Ferrari SpA.

Fiat Chrysler Chief Executive Officer Sergio Marchionne mentioned the vehicle while opening an Alfa Romeo and Maserati dealership near Toronto last week. While Jeep’s global sales have soared more than fourfold since 2009, helped by broad demand for SUVs and the popularity of new models, Marchionne said the brand is missing an opportunity.

“When I see a Range Rover on the street, my blood boils, because we should be able to do a thing like that,” he said with characteristic forthrightness. “And we will.”

The priciest Jeep now is the Grand Cherokee, which starts at about $30,000 and can top twice that fully loaded. Jeep has said it will bring back the larger Grand Wagoneer by 2018. A Range Rover rival would sit above that in the lineup, which also includes the entry-level Cherokee and Renegade, both hits with buyers and critics.

Marchionne, who declined to provide specifics about the luxury SUV, said his company didn’t mention the vehicle in a five-year plan laid out last year because he didn’t want to tip his hand too soon.

“Would I tell you that?” he said. “No, but we’re working on it now.”

Maserati Levante

David Kelleher, who owns a Jeep Chrysler dealership near Philadelphia, said he’s been pushing Fiat Chrysler for several years to expand Jeep into the high-end.

“You put Jeep on the front of anything right now and you’re OK,” he said.

Fiat Chrysler rose 1.6 percent to close at $15.04. The shares gained 30 percent this year through Wednesday’s close after gaining 30 percent in 2014.

SUV sales are booming and luxury models account for about half of that market. Still, the new Jeep will face plenty of competition. Fiat Chrysler’s Maserati plans to debut an SUV called Levante next year; Bentley is developing the Bentayga, which it bills as the most luxurious and expensive SUV. Audi plans to roll out a new full-sized sport-utility vehicle, the Q8, by 2020 that will challenge the $63,600 Mercedes-Benz GL and BMW is developing the X7. Jaguar will start selling its first crossover, the mid-sized F-PACE, next year.

Porsche’s Cayenne is its top-selling model this year through April and GM’s Escalade and Ford’s Lincoln Navigator are their brand’s fastest-gaining vehicles this year.

Jack Nerad, an analyst at KBB.com, said an expensive, luxury Jeep may take Americans by surprise.

Unique Brand

“But Jeep is unique,” he said. “There’s really no substitute for it in the market and that puts them in a pretty good position. There’s a lot of opportunity there.”

A luxury Jeep may do well overseas too, Nerad said.

Jeep is expanding production outside North America, adding lines in China, Italy and Brazil, to push the brand’s sales to 1.9 million cars in 2018 from a record of more than 1 million last year. It’s also increasing its dealerships in China by about a third this year and plans to start to build its Cherokee in November followed by the Renegade next year in 2016.

“In some markets, they know about Jeep, but they don’t know what the product line entails,” Nerad said. “In China, other parts of Asia and Europe, there’s an opportunity to do a high-end Jeep. I really think that’s a possibility.”

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