FCA Projects 2019 JL Sales Down from 2018

[jaldeborgh]

It’s very difficult to accurately assess the sales success of the JL vs. the JK, as well as overall Wrangler sales trends. Here’s why. First, the JL is built in a different factory from the JK, so for part of 2018 there were two factories building Wranglers, today there is one. Second, the JL production was ramped over time to try and manage training and quality so output was inconsistent. Third, shipments didn’t start on January 1st, so there’s no full year data.

As for 2019 sales, the JK factory was taken off-line to be retooled reducing total supply of Wranglers, in 2019. The Gladiator won’t show up in showrooms for months and will likely trickle out at first, like the JL, so it’s difficult to predict the 2019 sales contribution of that product.

The pricing of Wranglers is a strategy, being well executed. When any product is new it attracts premium buyers and it also, importantly, created a pricing umbrella that encouraged price sensitive buyers to forgo the JL as they perceived the JK to be a relative bargain, driving JK sales. Once the JK inventories are gone and if the demand for the JL softens FCA can release lower cost special editions of the product to manage average selling price without requiring rebates or incentives.

Next, market segmentation, it’s something Jeep does very well and it works. Look at the Grand Cherokee, there are 11 variants of that product with prices ranging from roughly $30k to almost $100k, this has expanded the market and attracted new buyers. Adding a hybrid and the Gladiator are only going to drive excitement and buying options for Jeep Wrangler fans. The goal is to broaden the appeal and grow the total available market. This is good marketing.

The bottom line is FCA is doing a brilliant, text book job of managing the brand. Remember, it’s a business and the management is rewarded on the performance of that business. At the same time customers win because of the broad range of choices. This is truly capitalism at its best, IMHO.

And no, I don’t work for FCA or even in the auto industry but I am a high tech capital equipment sales executive with an extensive marketing background.

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[WXman]

You can cut the watermelon in various ways, but it's still a watermelon. If supply begins to outpace demand, it is not a sustainable plan. And from the data in this thread, it sounds like that's exactly what Jeep is doing with the Wrangler.

 

[jaldeborgh]

I respectfully disagree, market segmentation is making the watermelon larger, that's the key point. The goal is to have people buy a Jeep rather than a Ford, GM or some non-FCA product. Examples, look at the Porsche 911, where again there are 15 or 20 different models with prices ranging from $90K to $340K, if there were only one model the marker reach would be much less. Look at the iPhone, in the beginning when the technology was new and there was no competition there was only one iPhone model, today in a mature market with fierce competition there are half a dozen models at various price points. Marker segmentation works that's why it's used by virtually every successful company, that operates in a competitive market.

 

[SecondTJ]

I’ll give you that 2019 will tell a lot. The JK was in a slight decline from 2015 where they sold 203k wranglers, then a 5% drop in 2016 and 2017 to 190k sold. I’d be curious to see how many JKs are still on the lot. I won’t speculate the percentage sold.
Also, January 2019 numbers are showing 13k sold, which is higher than any other January I can find on record, but again, to my point, that could still be leftover JKs on lots for all we know, right?

Yes, there are still leftover JK's sitting on lots.

A quick search for new inventory on cars.com shows 2,655 JK's and 52,060 JL's

Yes they reported 13k sold in January, but remember fleet sales are almost 12% now vs 4% previously. Which would mean that retail sales were actually flat, in line with previous January's.

 

[punknking]

tons of JLs and JKs out there. They cost so much people arent scooping them up anymore.

my JK sport in 2014 was 10K less than my JLU sport

 

[SecondTJ]

As for 2019 sales, the JK factory was taken off-line to be retooled reducing total supply of Wranglers, in 2019.

There is no supply shortage, there is a historic glut of unsold Wranglers.

As of Dec 2018: a 135 day supply with 85,979 Wranglers sitting on dealer lots

I respectfully disagree, market segmentation is making the watermelon larger, that's the key point.

The JK was constrained by production capacity. So far they are falling well short of the 350k/yr they set out for when they retooled and increased capacity. The watermelon isn't as large as they thought it was.

https://www.freep.com/story/money/cars/chrysler/2016/07/15/jeep-wrangler-production-toledo/87142838/

 

[quicksilvergoat]

Price is the problem. It’s beginning to show across the auto market. I suspect it’s only going to get worse. Manufacturers are beginning to get pinched as a result of pricing. Many of those whose could afford a particular car 5 years ago no longer can as a result. The buyers income has been outpaced by price increases.

 

[Litfuse]

Price is the problem. It’s beginning to show across the auto market. I suspect it’s only going to get worse. Manufacturers are beginning to get pinched as a result of pricing. Many of those whose could afford a particular car 5 years ago no longer can as a result. The buyers income has been outpaced by price increases.

I totally agree and FCA is not the only one guilty of it. It is amazing to see the cost of vehicles today. However, when you factor in inflation, vehicle cost is in line. As you mention, salary wages have not kept up. In a market that is now flooded with suvs and a departure from compact cars, I don’t know how new vehicles are even sold.

A friend of mine is the general manager of one of the largest Chevy dealers in my area. He shares that people come in, purchase loaded Suburbans with no money down and take on eight year loans with a payment over $1500 a month. Living outside one’s means has become the norm.

 

[COSJL]

0% APR was the norm when I was in the market for a new car in 2015. Now its 4-5% and the prices went up too, so it will definitely have an impact on new car sales at some point.
I also think FCA expects a significant down time in Q2 tooling up the plant for hybrid(and diesel maybe?), so they could be increasing the inventory levels on purpose.

 

[wrc777]

Fleet sales will hurt resale value. The more they sell that way the worse it will be.

 

[56nomad56]

The closest FCA dealership to me has 418 JL Wranglers listed, along with 2 remaining JKs. Is this a sign that sales are slowing, or a sales manager with overambitious expectations? Interestingly enough, the JK is only lightly discounted (maybe because it's a Willys), but the Sahara JKU has an $8,600 discount from MSRP.

I hope residual values do not fall as some have warned, as this aspect is one of the selling points I used to convince the wife why we should get a JLU!

 

[Majestic]

Fleet sales will hurt resale value. The more they sell that way the worse it will be.

What fleet is using Wranglers?

 

[Litfuse]

The closest FCA dealership to me has 418 JL Wranglers listed, along with 2 remaining JKs. Is this a sign that sales are slowing, or a sales manager with overambitious expectations? Interestingly enough, the JK is only lightly discounted (maybe because it's a Willys), but the Sahara JKU has an $8,600 discount from MSRP.

I hope residual values do not fall as some have warned, as this aspect is one of the selling points I used to convince the wife why we should get a JLU!

They have fallen, trust me. I’m trying to sell my JLR right now and having very little luck. In the past, I have been able to sell my Wranglers in a matter of days and close to what I paid for them when I bought them new. I am not having the same experience with my JLR.

 

[Majestic]

They have fallen, trust me. I’m trying to sell my JLR right now and having very little luck. In the past, I have been able to sell my Wranglers in a matter of days and close to what I paid for them when I bought them new. I am not having the same experience with my JLR.

You’re selling a 1 year old Jeep?
You might be in too close of a competition with a dealership. Dealers are usually just a couple thousand more than private sales and far more convenient when it comes to financing and trade ins.
It’s also winter and most people haven’t got their tax returns yet.

 

[SecondTJ]

What fleet is using Wranglers?

Budget, Avis, Hertz, Enterprise, etc

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