Jeep's Identity Crisis

Can it retain a tough image as it expands to a cushier line?

Former Chrysler President Robert A. Lutz was relaxing by a campfire in the Sierra Nevada mountains in the summer of 1988, having just spent a grueling day with Chrysler colleagues driving Jeep Wranglers through the narrow passages and rocky climbs of the legendary Rubicon Trail. Impressed by the Wrangler's performance, an enthusiastic Lutz gushed to his fellow campers: "All Jeep vehicles must be capable of the Rubicon Trail."

And so it was. Since then, every Jeep has been engineered to pass this torture test. Even the swanky, top-of-the-line Jeep Grand Cherokee--nobody's idea of a bare-bones rock crawler--can make the trip, albeit with a few dents and scratches. Jeep's reputation as an authentic mountain machine gave it one of the most crisply defined brands in the automotive business. Trouble is, off-road superiority doesn't count for as much with today's sport-utility buyers, who seem more intrigued by rear-seat entertainment systems and air-cooled upholstery. Now Jeep is faced with a pivotal decision--how can it extend into mainstream SUV territory without losing its rough and tumble image?

The trend has spelled trouble for Chrysler Group (DCX ), which for years let its most-enduring brand languish while competitors flooded the market with smoother-riding, car-based SUVs. Jeep's share of the booming SUV market has slipped to 15%, half what it was at its peak in 1993. While it was able at least to hold its unit volume steady for most of that period, lately that's been tanking--by 100,000 vehicles, or 20%, in the past two years, despite the successful launch of the new Jeep Liberty. The brand still represents a hefty one-fifth of Chrysler's sales. But its slide is bleak news for a company whose spectacular 1990s comeback was fueled by consumer enthusiasm for its Jeeps, other trucks, and minivans.

These days, Jeep finds itself sharing the road and off-road alike with a growing crowd of competitors. Consumers have their choice of 57 different SUVs, an array of mostly genteel sport-utes equipped more for the prosaic challenges of navigating suburbia than bouncing over boulders. It's an embarrassment to many inside Chrysler that Toyota Motor Corp.--which didn't even sell SUVs five years ago--today offers five models, vs. only three for Jeep. Laments James C. Schroer, Chrysler's executive vice-president for global sales and marketing: "We've got a better brand of SUVs than anybody, but we've got the most limited product line."

Now, finally, more Jeeps are coming to the rescue. Designers are busy planning at least two or three new models for the 2005-2006 time frame. Chrysler expects them to boost Jeep sales to about 700,000, from 455,000 in 2001. Getting that kind of expansion poses an enormous risk for Jeep. Unless it can find a way to satisfy both trailblazers and suburbanites, growth will slip even further. But Jeep runs a risk of losing core enthusiasts by making SUVs that are too soft. Although only about 5% of all SUV owners ever take their vehicles off-road, Chrysler believes that 15% to 25% of Jeep owners do. "They can't be viewed as too weak or illegitimate or they'll have no credibility as a four-wheel-drive vehicle," says Christopher W. Cedergren, managing director of Thousand Oaks (Calif.)-based researcher Nextrend Inc.

Some observers wonder why Chrysler took so long to face up to the task. George C. Peterson, president of consultant AutoPacific Group Inc. in Santa Ana, Calif., says it was simply caught flat-footed by the market's shift in taste. "It really appears that Chrysler has not chosen, or has not been able, to make the kind of product development commitments necessary to keep Jeep fully competitive," he says.

Jeep officials insist they are ready to pull off the balancing act. The success of Jeep Liberty proves that the nameplate can broaden its appeal, they say. While the Liberty has proven its mettle on the Rubicon Trail, it has a softer suspension for better on-road handling and has proven especially popular with women. Jeffrey Bell, vice-president of a recently created Jeep vehicle brand team, sees grounds for hope in the example of a once similarly neglected brand, Harley-Davidson Inc. Like Jeep, Harley was a clearly articulated, American brand that came under attack from foreign rivals. In response, the company "didn't abandon what Harley-Davidson stood for," says Bell. "Instead, the company redoubled its effort."

That's his plan, too. In both its marketing and new products, Bell says, Jeep must stick to its core attributes: authenticity, four-wheel-drive capability, and adventure. The $25,000 Wrangler Rubicon, which goes into production later this month, fits the bill. The most nimble of all Jeeps, it comes with front and rear locking axles, giant tires, and extra low gear speeds. It's a strong defensive move against General Motors Corp., whose new vice-chairman--ominously, Bob Lutz, who left Chrysler in 1998--plans to attack Jeep's off-road dominance with ever-smaller versions of its Hummer.

Where Chrysler's challenge gets trickier is stretching Jeep in new directions. Chrysler officials say it's no longer cast in stone that every Jeep have Rubicon capability. Instead, Chrysler now talks about "rescue capability": Jeeps must always be better at helping motorists handle severe driving conditions, like a flooded road or an ice storm. Chief Executive Dieter Zetsche doesn't favor copying the recent trend toward smaller "cute utes" like Honda Motor Co.'s CR-V. Instead, he's pushing for unique vehicles like the youthful Jeep Compass, a two-door concept car. But Chrysler insiders say there's no agreement on what those new vehicles should look like: The Compass, with its aerodynamic, rally-car looks? Or more rugged and boxy, like a traditional Jeep?

One option: Do both. For a planned refreshing of the $30,000 Grand Cherokee in 2005, designers are slathering on all the creature comforts one would expect in a luxury SUV. But company sources say a second, more utilitarian derivative is also in the works to satisfy Jeep purists. That way, Chrysler might be able to offer the refinements that the increasing ranks of SUV owners crave without losing the soul of its most powerful brand.

Corrections and Clarifications "Jeep's identity crisis" (Marketing, Aug. 12) incorrectly stated that Toyota Motor Corp. did not sell SUVs five years ago. In fact, it has sold the Land Cruiser and 4Runner SUV models for many years.

By Joann Muller in Rubicon Springs, Calif.

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