Chrysler and Fiat CEO Sergio Marchionne said today that Chrysler plans to invest $1.7 billion to build its next generation Jeep SUV at an assembly plant in Toledo and may name the new vehicle the Cherokee.
“This plant has been chosen to build the future Jeep SUV to replace the current Jeep Liberty that will be exported to markets all over the world,” Marchionne said when he spoke at the plant today in Toledo. “Bringing this new architecture to Toledo will allow us to add a second shift of production, which means about 1,100 jobs at this plant.”
Marchionne said Chrysler will spend $500 million at the plant and the remainder will be invested at other Chrysler plants, for supplier tooling and other related development costs.
Chrysler plans to add the jobs by the fall of 2013.
Chrysler’s Toledo North plant, which is part of its Toledo Assembly Complex, opened in 1997 and is the only plant operating on just one shift in North America.
Marchionne’s announcement comes exactly three weeks after Chrysler’s UAW hourly workers narrowly ratified a new four-year labor contract.
As a part of that contract, Chrysler promised it would invest $4.5 billion and create 2,100 new jobs over the next four years.
“We are taking a big step toward fulfilling that promise today,” Marchionne said.
The Auburn Hills automaker was approved by the state of Ohio in August for tax incentives that pave the way the investments.
Ohio Gov. John Kaisch said Chrysler’s announcement will deepen Chrysler’s roots in Toledo and benefit the community.
“This is a big decision by this guy,” Kaisch said. “It is a big investment. This means they are going to stick $1 billion in their operations and a half a billion into Toledo.”
Chrysler began building the Jeep Liberty at the plant in 2001 when it replaced the Jeep Cherokee. The next generation Jeep Liberty will be built off of a widened version of the platform Fiat uses for the Alfa Romeo Giulietta, according to Chrysler’s five-year plan.
Marchionne said Chrysler is thinking about returning to the Cherokee name when it launches the replacement for the Liberty. He also said at least one additional vehicle will be built off of the same platform at Toledo North.
Production of the Doge Nitro, the current sibling to the Liberty, is scheduled to end in December.
That platform for the new Jeep SUV is expected to underpin as many as six future Chrysler, Dodge and Jeep vehicles in the high-volume compact and mid-sized segments.
Chrysler had high hopes for the Liberty when it was introduced in 2001, but it has not lived up to expectations.
The Liberty is “nothing less and nothing more than the future of our company,” Chrysler President Dieter Zetsche said in 2001. Zetsche said he expected Jeep to produce 200,000 annually.
So far this year, Jeep Liberty sales have increased 34.4% to 55,322 in the U.S. Industry sales have increased 10.1%.
The Liberty is outselling small SUVs with off-road capability such as the Nissan Xterra, which sold 14,608 so far this year and the Toyota FJ Cruiser, which has sold 11,452 this year.
Still, the Liberty is easily outsold by other small crossovers and SUVs. Through October, Ford has sold 206,896 Escape SUVs while Chevrolet has sold 162,283 Equinox crossovers.
Analysts expect the new Liberty to lose some of its off-road ruggedness so it can appeal to a wider customer base even though that change could dilute the Jeep brand image.
“Jeep markets its vehicles so that they can go everywhere,” said Aaron Bragman, analyst for IHS Automotive. “I think if they want to keep that credibility, they need to retain that ability for their vehicles.”
But Jim Hall, managing director of 2953 Analytics, said that’s a risk Jeep must take.
“The problem with the Jeep is, in a lot of cases, they have more capability than the customer is ever going to use,” Hall said.
Hall said the company should rely on the Jeep Wrangler to lead the way for off-road capability and introduce a Jeep Liberty with better fuel economy and slightly less off-road capability.
The two-wheel drive version of the 2011 Liberty gets a combined 18 miles per gallon.
“They have to make the cars friendly to people who aren’t going off road, but they still want something that is part of Jeep’s character,” Hall said.
The change also is essential as Chrysler works to turn broaden Jeeps sales globally, Hall said.
“This is more about expanding Jeep's market footprint,” Hall said.
Contact Brent Snavely: 313-222-6512 or
bsnavely@freepress.com
