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Q3 Global Sales Call :Palmer states historically Durango has been a victim of Grand Cherokee success

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AlexB

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Much under reported event, keep in mind Stellantis no longer do Quarterly Earnings like FIAT and previous versions of Chrysler.
This is because the French Government believes quarterly reporting takes focus away from the long-term of a company, so France is one of the only nations that allows such 6 month reporting.
So instead, Stellantis does a Sales Conference Call hosted by Sergio’s Chief Financial Officer; Richard Palmer.

I will give a overview of the call:
Palmer opens up with the call discussing net revenue of the Merged Company Of €32..6 billion during Q3 2021 which is down -14% with production down -30% and sales volume down -27%.
Palmer cited the chip shortage particularly in Southeast Asia area including COVID restrictions, but sees moderate improvement in chip availability throughout Q4 which was the theme of Palmer’s commentary throughout the call. November will basically be the “bottom” of the situation of Chip shortage.

Beyond chips, Palmer praise the performance of the Jeep brand during quarter around the world.
Moving to North America Palmer called out pricing as highly positive for the company: He breakdown of North America pricing was:
*Higher MSRPS
*Option loads/Configurations of Options
*Version mix
*Momentum of Grand Cherokee L
*Momentum of Wrangler especially the performance of Wrangler 4xe
*Discontinuation of Grand Caravan and Journey.
* Lower sales of Lower Ticket products like Cherokee, Compass
Palmer during Q&A when ask about the margins vs “Detroit Peers” stated Stellantis in North America is clearly operating at a higher level than Ford/GM.
Palmer confirmed profit guidance which means 2021 will be the most profitable year ever for North America/Chrysler with profit before Interest and taxes of $12-13 billion.
Not done with North America discussion, Palmer talked about importance of the Grand Cherokee to Jeep brand, and Grand Cherokee L is solving a important gaps in Company lineup.
Palmer stated previously the company made Grand Cherokee and Durango together at JNAP, but JNAP ran out of capacity.
As a result Durango was a Victim of the Grand Cherokee’s success, historical the company would prioritize the Grand Cherokee.
Adding the Mack plant allows the company to produce more Grand Cherokee’s, including addressing International opportunities and Palmer stated the Grand Cherokee became the best selling CUV/SUV in the U.S. during Q3.

On the Wagoneer family launch Palmer stated the company is prioritizing the Grand Wagoneer (Chips) and that due to the Grand Cherokee success , Jeep had to go into the segment which before the Wagoneer family the company didn’t have competing models against “GM Triplets “ as well the Navigator.

More to come from the lengthy call including European markets!
 
@redriderbob
Where there’s Smoke there’s fire…. (Durango )
Notice Palmer is displaying the Grand Cherokee as “Full Size”.
Maybe something underneath Grand Cherokee!
 
AlexB said:
@redriderbob
Where there’s Smoke there’s fire…. (Durango )
Notice Palmer is displaying the Grand Cherokee as “Full Size”.
Maybe something underneath Grand Cherokee!
Click to expand...

Durango and Grand Cherokee are considered full-size SUVs (E-Segment) in today's world. It's been that way for a while now. Cherokee (KL) is a midsize SUV (D-Segment), Compass (C-Segment) is considered a compact.

Production of the Durango has been limited due to Grand Cherokee (WK2) sales for years. This explains why a jump to BoF could be a good thing for production for the Durango.
 
The Jefferson capacity was limited, so the only way a Durango got made was to not make a Grand Cherokee.
 
redriderbob said:
Durango and Grand Cherokee are considered full-size SUVs (E-Segment) in today's world. It's been that way for a while now. Cherokee (KL) is a midsize SUV (D-Segment), Compass (C-Segment) is considered a compact.

Production of the Durango has been limited due to Grand Cherokee (WK2) sales for years. This explains why a jump to BoF could be a good thing for production for the Durango.
Click to expand...

They're targeting a completely different market with the BoF Durango - fleet sales (government) and a performance oriented offering, with a cheaper entry point vs. Wagoneer. But at the end of the day it's a seven passenger vehicle with a $50K+ starting price.

Losing Durango in 2023 means that the cheapest seven passenger vehicle is the Grand Cherokee L Laredo (which is $40K) vs. that a $33K entry Durango.

I'm not aware of any upcoming seven passenger offerings for North America that will be priced lower than Grand Cherokee L. The Journey is long gone, and the Durango will soon join it.

They're going to run into the brick wall a reality if they think they're going to produce WL74 and WL75 at full tilt (when Durango goes away) with the prices they're charging. No way in hell will they sell 400-500K units/year of WL74 + WL75 at the current prices.

JNAP will be underutilized when Durango goes away, or there will be an abundance of unsold WL74 on the lots.
 
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Well lets give it a try, because the truth is NO ONE KNOWS not you, not me, Management may have a good idea.... Because the Grand Cherokee has always been supply limited. Now the Durango replacement in the marketplace the L has its own capacity. They don't need a model that sells at a lesser transaction price. If they need to, they can adjust margin to market, instead of spending money on something they know makes less.

I am a big fan of the outgoing Durango, but the reality is people will pay more a Jeep, taking it to a more higher margin segment seems wise.

If one is moaning the lose of value buyers, honestly that is something the company is trying to shed, Leaving it too the Koreans and the used market.
 
We won't have to wait long to see who is right. I'm a WK2 buyer that can well afford WL74 and is opting out of these ridiculous prices. I have a feeling I'm not the only one.
 
cygnus said:
We won't have to wait long to see who is right. I'm a WK2 buyer that can well afford WL74 and is opting out of these ridiculous prices. I have a feeling I'm not the only one.
Click to expand...
Well I likely will be covering for you.

There is no right or wrong... the fact is the Plant has and sales of it models have always been capacity limited not demand limited.

Right now with the supply chain issues everything is capacity limited and basic economics of supply and demand dictate higher prices.
 
Chrysler still makes minivans. The Pacifica can be expensive, but it costs less than the three row Jeeps. The 3 row Durango is still available and production capacity has been added as the Grand Cherokee moves to a new facility. Hopefully the chip shortage will fade allowing more vehicles to be built.
 
Lets not talk about gas prices......

While we all want a good deal, the company job is to charge as much as the market will bear out of its capacity and material investments.
 
Some are sure that WL74 and WL75 will be the only two cars produced at the new complex?
 
I don't see additional being added to JNAP or Mack before 2025 if you're alluding to the rumored Alfa E-SUV variants.
 
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