WSJ - Jeep, Hummer Look to Expand Market Without Losing Cachet With Drivers

[Klaus]

Keeping It Real

Jeep, Hummer Look to Expand Market
Without Losing Cachet With Drivers
August 9, 2004

"Real" and "authentic" are popular words in the car business right now. The more car companies look to make vehicles the same under the skin to cut costs, the more they want to assure prospective customers they are still getting something bona fide and distinctive for their money.

Consider the market for military-style sport-utility vehicles, or more precisely, sport-utility vehicles that have brand images rooted in military service. The two brands that represent the bulk of this subculture in the U.S., Jeep and Hummer, are both about to embark on programs to expand their product portfolios and sales. Both will try to position themselves as genuine articles, and by implication both brands will need to convince customers that they shouldn't settle for poseur SUVs unfit for combat duty.

This will be a tricky business. Sixty years ago, Jeeps helped the U.S. and its allies win World War II. Subsequently, as America's warriors found civilian employment, so did the Jeep. Like most veterans, Jeeps over the years became bigger, softer and more adapted to life in town. Vehicles in a wide variety of shapes and sizes have been called Jeeps, including a low-riding, car-like machine called a Jeepster, a pickup truck, and a big St. Bernard of a family hauler called the Grand Wagoneer.

Still, throughout its evolution, Jeep continued to trade on its past as a vehicle that will take you anywhere and get you back alive. "Jeep keeps it real," says Jeff Bell, the DaimlerChrysler executive in charge of the Jeep and Chrysler brands at the company's Chrysler Group unit. Of rival brands, he asks, "Is it real? Does it have a lot of fluff, and no stuff?"

Jeep's biggest problem, however, is that a lot of consumers who otherwise like high-riding, all-wheel-drive wagons are opting for what Mr. Bell dismisses as "gussied up cars" in part because they are, well, fluffier.

Now, Jeep is walking a tightrope between keeping it real and keeping ahead of the competition. This fall, Jeep will launch a redesigned Grand Cherokee, the brand's top-of-the-line model, that will be able to pass a 37-point test of off-road capability. This makes the Grand Cherokee "trail rated," in Jeep's new phrase. But at the same time, Mr. Bell makes clear Jeep will get out the word that this Grand Cherokee is much more refined than the previous model on paved roads and parking lots. The 2005 Grand Cherokee is also three inches wider and five inches longer than the 2004 model -- the better to carry people and groceries. And for those willing to pay extra, the Grand Cherokee will have an optional 5.7 liter V-8 "Hemi" engine. Chrysler hasn't set prices yet for the new Grand Cherokee.

During the next two to three years, Jeep plans to add several new models to its lineup to spur more-robust growth. Next year comes a seven-passenger Jeep called the Commander. Last week, Chrysler announced plans to expand its Jeep-building facilities in Toledo, Ohio to make still more, as-yet-unidentified Jeep variants probably related to the current Jeep Liberty compact SUV. Meanwhile, the Liberty gets a diesel-engine option for the 2005 model year.

Jeep's product offensive comes not a minute too soon. Besides the threat from the growing popularity of soft-riding crossover SUVs like the Toyota Highlander or Acura MDX, Jeep faces an escalating challenge from another brand with military roots, Hummer.

Hummer's recent sales skid has delighted SUV haters who consider the brand's hulking H2 model a caricature of all that is garish and wasteful in American society. General Motors doesn't publish mileage ratings for the H2, because it's too big to be covered by the rules that require that disclosure. As one fan posted on Edmunds.com: "If you have to ask about the gas mileage, don't buy one."

Now, the GM division is working on a major brand extension of its own. Hummer plans to launch next spring a new model line called H3. These will be medium-sized Hummers with smaller engines, smaller price tags and less thirst for gasoline than the big H2 line.

The Hummer H2 and H3 have little in common with the military vehicles on duty in Iraq, or with the Hummer H1, the aging civilian version of the Gulf War people carrier. Instead, the H2 and H3 are derivatives of Chevy pickup trucks and SUVs. The H2 shares components and basic architecture with GM's large Silverado pickup and Chevy Tahoe SUVs. The H3 will share parts and technology with the smaller Chevy Colorado pickup.

Roger McCormack, product director for Hummer, says every Hummer vehicle has to meet certain criteria. "It has to look like a Hummer," he says. And it has to "be spectacular off-road."

Since Hummer currently is so clearly identified with a very large SUV, Mr. McCormack says Hummer marketers also tested the waters to find out, "did we have a license to go down market in size and price?" Another angle Hummer explored was whether all Hummers had to be SUVs? Answer: No, which is why Hummer is exploring the possibility of offering a true pickup – as Jeep has done in its past.

Hummer has a lot of cachet with younger consumers, most of whom can't afford an H2. Prices for the H3 aren't established yet, but they'll be a lot lower than the $50,000 or so that an H2 can cost. "We expect to compete with mid- size SUVs and premium SUVs," Mr. McCormack says. That suggests prices in the $30,000 and up range -- and competition with Jeep, among numerous other players.

Hummer's decision to do the H3 looks particularly smart now that oil prices are jumping back up to new highs in nominal dollars (although inflation adjusted oil prices remain well below the 1970s and 1980s peaks.) The new, smaller Hummers "will absolutely be more fuel-efficient" than the H2, Mr. McCormack says. Still, he says, from a marketing point of view, "we say, through and through, it's a Hummer."

Is all this real? Depends on what your definition of "real" is. Compared to real Army vehicles, Jeeps and Hummers have more-comfortable interiors, smoother-riding suspensions, and engines that are quieter and certainly cleaner than the original Army Jeeps. Today's Jeeps and Hummers have almost nothing in common with their forebears. Consumers should be glad they don't.

[Klaus]

Keeping It Real

Jeep, Hummer Look to Expand Market
Without Losing Cachet With Drivers
August 9, 2004

"Real" and "authentic" are popular words in the car business right now. The more car companies look to make vehicles the same under the skin to cut costs, the more they want to assure prospective customers they are still getting something bona fide and distinctive for their money.

Consider the market for military-style sport-utility vehicles, or more precisely, sport-utility vehicles that have brand images rooted in military service. The two brands that represent the bulk of this subculture in the U.S., Jeep and Hummer, are both about to embark on programs to expand their product portfolios and sales. Both will try to position themselves as genuine articles, and by implication both brands will need to convince customers that they shouldn't settle for poseur SUVs unfit for combat duty.

This will be a tricky business. Sixty years ago, Jeeps helped the U.S. and its allies win World War II. Subsequently, as America's warriors found civilian employment, so did the Jeep. Like most veterans, Jeeps over the years became bigger, softer and more adapted to life in town. Vehicles in a wide variety of shapes and sizes have been called Jeeps, including a low-riding, car-like machine called a Jeepster, a pickup truck, and a big St. Bernard of a family hauler called the Grand Wagoneer.

Still, throughout its evolution, Jeep continued to trade on its past as a vehicle that will take you anywhere and get you back alive. "Jeep keeps it real," says Jeff Bell, the DaimlerChrysler executive in charge of the Jeep and Chrysler brands at the company's Chrysler Group unit. Of rival brands, he asks, "Is it real? Does it have a lot of fluff, and no stuff?"

Jeep's biggest problem, however, is that a lot of consumers who otherwise like high-riding, all-wheel-drive wagons are opting for what Mr. Bell dismisses as "gussied up cars" in part because they are, well, fluffier.

Now, Jeep is walking a tightrope between keeping it real and keeping ahead of the competition. This fall, Jeep will launch a redesigned Grand Cherokee, the brand's top-of-the-line model, that will be able to pass a 37-point test of off-road capability. This makes the Grand Cherokee "trail rated," in Jeep's new phrase. But at the same time, Mr. Bell makes clear Jeep will get out the word that this Grand Cherokee is much more refined than the previous model on paved roads and parking lots. The 2005 Grand Cherokee is also three inches wider and five inches longer than the 2004 model -- the better to carry people and groceries. And for those willing to pay extra, the Grand Cherokee will have an optional 5.7 liter V-8 "Hemi" engine. Chrysler hasn't set prices yet for the new Grand Cherokee.

During the next two to three years, Jeep plans to add several new models to its lineup to spur more-robust growth. Next year comes a seven-passenger Jeep called the Commander. Last week, Chrysler announced plans to expand its Jeep-building facilities in Toledo, Ohio to make still more, as-yet-unidentified Jeep variants probably related to the current Jeep Liberty compact SUV. Meanwhile, the Liberty gets a diesel-engine option for the 2005 model year.

Jeep's product offensive comes not a minute too soon. Besides the threat from the growing popularity of soft-riding crossover SUVs like the Toyota Highlander or Acura MDX, Jeep faces an escalating challenge from another brand with military roots, Hummer.

Hummer's recent sales skid has delighted SUV haters who consider the brand's hulking H2 model a caricature of all that is garish and wasteful in American society. General Motors doesn't publish mileage ratings for the H2, because it's too big to be covered by the rules that require that disclosure. As one fan posted on Edmunds.com: "If you have to ask about the gas mileage, don't buy one."

Now, the GM division is working on a major brand extension of its own. Hummer plans to launch next spring a new model line called H3. These will be medium-sized Hummers with smaller engines, smaller price tags and less thirst for gasoline than the big H2 line.

The Hummer H2 and H3 have little in common with the military vehicles on duty in Iraq, or with the Hummer H1, the aging civilian version of the Gulf War people carrier. Instead, the H2 and H3 are derivatives of Chevy pickup trucks and SUVs. The H2 shares components and basic architecture with GM's large Silverado pickup and Chevy Tahoe SUVs. The H3 will share parts and technology with the smaller Chevy Colorado pickup.

Roger McCormack, product director for Hummer, says every Hummer vehicle has to meet certain criteria. "It has to look like a Hummer," he says. And it has to "be spectacular off-road."

Since Hummer currently is so clearly identified with a very large SUV, Mr. McCormack says Hummer marketers also tested the waters to find out, "did we have a license to go down market in size and price?" Another angle Hummer explored was whether all Hummers had to be SUVs? Answer: No, which is why Hummer is exploring the possibility of offering a true pickup – as Jeep has done in its past.

Hummer has a lot of cachet with younger consumers, most of whom can't afford an H2. Prices for the H3 aren't established yet, but they'll be a lot lower than the $50,000 or so that an H2 can cost. "We expect to compete with mid- size SUVs and premium SUVs," Mr. McCormack says. That suggests prices in the $30,000 and up range -- and competition with Jeep, among numerous other players.

Hummer's decision to do the H3 looks particularly smart now that oil prices are jumping back up to new highs in nominal dollars (although inflation adjusted oil prices remain well below the 1970s and 1980s peaks.) The new, smaller Hummers "will absolutely be more fuel-efficient" than the H2, Mr. McCormack says. Still, he says, from a marketing point of view, "we say, through and through, it's a Hummer."

Is all this real? Depends on what your definition of "real" is. Compared to real Army vehicles, Jeeps and Hummers have more-comfortable interiors, smoother-riding suspensions, and engines that are quieter and certainly cleaner than the original Army Jeeps. Today's Jeeps and Hummers have almost nothing in common with their forebears. Consumers should be glad they don't.

[Klaus]

Keeping It Real

Jeep, Hummer Look to Expand Market
Without Losing Cachet With Drivers
August 9, 2004

"Real" and "authentic" are popular words in the car business right now. The more car companies look to make vehicles the same under the skin to cut costs, the more they want to assure prospective customers they are still getting something bona fide and distinctive for their money.

Consider the market for military-style sport-utility vehicles, or more precisely, sport-utility vehicles that have brand images rooted in military service. The two brands that represent the bulk of this subculture in the U.S., Jeep and Hummer, are both about to embark on programs to expand their product portfolios and sales. Both will try to position themselves as genuine articles, and by implication both brands will need to convince customers that they shouldn't settle for poseur SUVs unfit for combat duty.

This will be a tricky business. Sixty years ago, Jeeps helped the U.S. and its allies win World War II. Subsequently, as America's warriors found civilian employment, so did the Jeep. Like most veterans, Jeeps over the years became bigger, softer and more adapted to life in town. Vehicles in a wide variety of shapes and sizes have been called Jeeps, including a low-riding, car-like machine called a Jeepster, a pickup truck, and a big St. Bernard of a family hauler called the Grand Wagoneer.

Still, throughout its evolution, Jeep continued to trade on its past as a vehicle that will take you anywhere and get you back alive. "Jeep keeps it real," says Jeff Bell, the DaimlerChrysler executive in charge of the Jeep and Chrysler brands at the company's Chrysler Group unit. Of rival brands, he asks, "Is it real? Does it have a lot of fluff, and no stuff?"

Jeep's biggest problem, however, is that a lot of consumers who otherwise like high-riding, all-wheel-drive wagons are opting for what Mr. Bell dismisses as "gussied up cars" in part because they are, well, fluffier.

Now, Jeep is walking a tightrope between keeping it real and keeping ahead of the competition. This fall, Jeep will launch a redesigned Grand Cherokee, the brand's top-of-the-line model, that will be able to pass a 37-point test of off-road capability. This makes the Grand Cherokee "trail rated," in Jeep's new phrase. But at the same time, Mr. Bell makes clear Jeep will get out the word that this Grand Cherokee is much more refined than the previous model on paved roads and parking lots. The 2005 Grand Cherokee is also three inches wider and five inches longer than the 2004 model -- the better to carry people and groceries. And for those willing to pay extra, the Grand Cherokee will have an optional 5.7 liter V-8 "Hemi" engine. Chrysler hasn't set prices yet for the new Grand Cherokee.

During the next two to three years, Jeep plans to add several new models to its lineup to spur more-robust growth. Next year comes a seven-passenger Jeep called the Commander. Last week, Chrysler announced plans to expand its Jeep-building facilities in Toledo, Ohio to make still more, as-yet-unidentified Jeep variants probably related to the current Jeep Liberty compact SUV. Meanwhile, the Liberty gets a diesel-engine option for the 2005 model year.

Jeep's product offensive comes not a minute too soon. Besides the threat from the growing popularity of soft-riding crossover SUVs like the Toyota Highlander or Acura MDX, Jeep faces an escalating challenge from another brand with military roots, Hummer.

Hummer's recent sales skid has delighted SUV haters who consider the brand's hulking H2 model a caricature of all that is garish and wasteful in American society. General Motors doesn't publish mileage ratings for the H2, because it's too big to be covered by the rules that require that disclosure. As one fan posted on Edmunds.com: "If you have to ask about the gas mileage, don't buy one."

Now, the GM division is working on a major brand extension of its own. Hummer plans to launch next spring a new model line called H3. These will be medium-sized Hummers with smaller engines, smaller price tags and less thirst for gasoline than the big H2 line.

The Hummer H2 and H3 have little in common with the military vehicles on duty in Iraq, or with the Hummer H1, the aging civilian version of the Gulf War people carrier. Instead, the H2 and H3 are derivatives of Chevy pickup trucks and SUVs. The H2 shares components and basic architecture with GM's large Silverado pickup and Chevy Tahoe SUVs. The H3 will share parts and technology with the smaller Chevy Colorado pickup.

Roger McCormack, product director for Hummer, says every Hummer vehicle has to meet certain criteria. "It has to look like a Hummer," he says. And it has to "be spectacular off-road."

Since Hummer currently is so clearly identified with a very large SUV, Mr. McCormack says Hummer marketers also tested the waters to find out, "did we have a license to go down market in size and price?" Another angle Hummer explored was whether all Hummers had to be SUVs? Answer: No, which is why Hummer is exploring the possibility of offering a true pickup – as Jeep has done in its past.

Hummer has a lot of cachet with younger consumers, most of whom can't afford an H2. Prices for the H3 aren't established yet, but they'll be a lot lower than the $50,000 or so that an H2 can cost. "We expect to compete with mid- size SUVs and premium SUVs," Mr. McCormack says. That suggests prices in the $30,000 and up range -- and competition with Jeep, among numerous other players.

Hummer's decision to do the H3 looks particularly smart now that oil prices are jumping back up to new highs in nominal dollars (although inflation adjusted oil prices remain well below the 1970s and 1980s peaks.) The new, smaller Hummers "will absolutely be more fuel-efficient" than the H2, Mr. McCormack says. Still, he says, from a marketing point of view, "we say, through and through, it's a Hummer."

Is all this real? Depends on what your definition of "real" is. Compared to real Army vehicles, Jeeps and Hummers have more-comfortable interiors, smoother-riding suspensions, and engines that are quieter and certainly cleaner than the original Army Jeeps. Today's Jeeps and Hummers have almost nothing in common with their forebears. Consumers should be glad they don't.