Jeep Missing Its Compass Leaves Brand Adrift as Rival SUVs Surge

  • All-new crossover model will feature better mileage, legroom
  • U.S. sales seen accelerating to 17.2 million annualized rate

After practically inventing the sport utility vehicle, Jeep is missing out on the segment’s latest boom.

While SUV sales in the U.S. jumped 11 percent over the past four months, Jeep saw its volume drop 10 percent. One of the problems: A lack of supply that’s kept dealers waiting for the all-new 2017 Compass compact crossover, which replaces both the outgoing version and the similar Patriot model.

When automakers announce March U.S. sales on Monday, Jeep isn’t expected to show much improvement. The 2017 Compass is just beginning to reach dealers, who don’t anticipate having a decent supply until late April or May. As of last week, only about 100 or 150 of the vehicles had been delivered, said Mike Manley, who heads the brand globally for parent Fiat Chrysler Automobiles NV.

“You’ll see basically zero sales this month,” Manley told reporters Thursday. “Then, hopefully, we’ll see the traction from next month onward.”

The new Compass will take on the crossover models that are displacing family sedans in American driveways with improved fuel economy and capability. At 4.4 meters (14.4 feet) long and with more rear-seat legroom, it slots into the brand’s lineup between the Renegade and the Cherokee. The U.S.-sold Compass will be made in Mexico, and the model also will be assembled in India, Brazil and China, reaching consumers in more than 100 countries.

Fiat Chrysler Chief Executive Officer Sergio Marchionne is reorganizing the company’s factories to produce more of the SUVs and pickups that Americans demand. He’s killing off two slow-selling car models to make way for more light trucks. But it takes time to retool factories, and the automaker hasn’t been able to produce enough SUVs to meet demand.

“The car market is very different now -- it’s just transitioning to SUVs, and why not?” said David Kelleher, a Philadelphia-area dealer. 

In addition to providing a smaller option for shoppers who don’t need a larger Grand Cherokee, Kelleher said he hopes the new Compass will have the sort of fit and finish that won the Chrysler Pacifica minivan praise from Consumer Reports, which dubbed it best in category. Plaudits from the independent magazine are a rarity for Fiat Chrysler -- three of its brands finished in the bottom five of its 2017 Brand Report Card issued last month.

Excluding full-size pickups, the top-selling models so far this year aren’t sedans, but crossovers -- Nissan Rogue deliveries are up 50 percent, and the Honda CR-V has gained 38 percent. For the past 15 years, the Toyota Camry has been the best-selling non-pickup, but Japan’s largest automaker anticipates the RAV4 crossover will be its top seller this year.

Industrywide sales in March will only reinforce the SUV trend, according to Kelley Blue Book, which projects double-digit increases in both the compact and midsize segments.

General Motors Co., with three new SUV models introduced last year, may be the biggest gainer among large automakers, according to Bloomberg’s survey of analysts. The average projection is for a 7 percent sales increase at GM, while Ford Motor Co. is seen dropping 5.9 percent compared with a year earlier, driven by a pullback in deliveries to fleet customers. 

The industry’s annualized sales pace, adjusted for seasonal trends, probably accelerated to 17.2 million, the average of 11 analyst estimates, compared with 16.7 million a year earlier, when the early Easter holiday depressed March deliveries.

First-quarter sales comparable to last year required significantly higher incentives and discounts, indicating softness in demand after seven years of growth and consecutive annual records, said Kelley Blue Book’s Tim Fleming, who projects a 1 percent to 4 percent decline for the year.

With the still-limited supply of new Compass models, Fiat Chrysler sales are projected to be up only 0.4 percent. The company also is scaling back on fleet sales, which fell 58 percent at Jeep in the first two months of 2017, according to Manley.

The balance between volume and profit is important to keep in mind as Fiat Chrysler dramatically improves the Compass, said Rebecca Lindland, an analyst with Cox Automotive.

“I’m not so concerned about their year-on-year comparisons as far as sales,” she said. “I want them just to make profit and to be responsible with the vehicles, with their incentive levels. I think they will.”

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