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FCA

by Matt Konkle
Quadratec Channel Editor


At first glance, the number stands out like a white-hot spotlight cutting through midnight blackness. Twenty-five percent. One-quarter. A fourth. The big one-four. Really, you can call it what you want, but that’s the number Jeep Wrangler sales dropped in April, against the same month last year.

Twenty-five percent.

And, in turn, that amount helped drag down Fiat Chrysler Automobiles an overall 6 percent in April, the automaker Wednesday announced. It was also the company’s third straight monthly decline, and third for Wrangler after a solid January performance.

The entire Jeep brand itself slipped 8 percent, and actually could have been worse save for record April numbers from Compass and Grand Cherokee. Those performances, along with record numbers from the Dodge Ram pickup, seemed to soothe FCA executives a bit despite the total slide, and provided hope that they may soon break out of their downturn.

"April marks the start of the spring selling season and we anticipate strong consumer spending as we move through May," FCA's U.S. Head of Sales Reid Bigland said in a statement. "The industry may be shaking off the first-quarter sluggishness, but shoppers are coming into showrooms and buying."

So is this recent Wrangler downturn something of worry?

Perhaps not. And perhaps this is actually the best time to grab a new Wrangler JL. For two reasons really; discounts, and the Gladiator.

For Wrangler, its April sales figure may seem a bit frosty, but consider that the vehicle was actually going against some powerhouse numbers from last year—when FCA had both the old generation JK and red hot new generation JL on dealer lots. In fact, if you measure April’s performance against 2017 numbers, Wrangler was actually up a healthy 19 percent. Plus, when you think about it, Jeep sold 22,422 Wranglers in April, equating to one purchased about every 30 seconds throughout the month. A pretty fast pace.

Additionally, no matter the reason, slower sales generally result in larger dealer inventories and, thus, prompts these dealers to offer expanded rebates and discounts. Two things that are music to the ears of potential buyers who may have previously been a bit hesitant.

"Slower April sales didn't do much to eat into the industry's mounting inventory levels, so we might start to see manufacturers and dealers begin to loosen the reins on incentives," Edmunds analyst Jessica Caldwell said.

Besides rebates fueling a spring/summer Wrangler sales wave, another probable positive for those interested in Wrangler is the imminent arrival of its latest vehicle, the Jeep Gladiator truck, which is just starting to hit dealer lots.

”We sold more than 300 Jeep Gladiators (314 total in April), which are now starting to arrive in showrooms across the country, and we expect our Gladiator count to continue to rise, reflecting both ongoing demand and the fulfillment of the 4,190 orders taken in early April for the 2020 Gladiator Launch Edition," Bigland said.

FCA has moved 437 Gladiators total this year, and that number will undoubtedly skyrocket over the next few months as more and more Jeep trucks flow into dealer lots.

Those who really want a Gladiator will most likely purchase one, but FCA has made it clear they are worried about how many Wrangler sales the truck may cannibalize. Some estimates believe that number to be between 10-15 percent. So any dealers who have not discounted Wrangler previously, will no doubt have that vehicle ready to sell to anyone not quite convinced about the truck, or those who really just want the comfort and security of a tried-and-true Wrangler.

However, one substantial concern is the current interest rate for many potential buyers. That rate has shot past 6 percent for many consumers and those higher rates may cause buyers to hit the pause button when trying to finance more expensive vehicles. Especially as the average vehicle price now sits about $36,719 – up $624 over April 2018.

"April sales were a bit dampened by the harsh financing conditions we’ve been seeing in the…market," Caldwell said in a statement. "Shoppers are really starting to feel the pinch as prices continue to creep up and interest rates loom at post-recession highs."

All in all though, it certainly does appear that slowing sales and growing inventory levels, combined with discounts and rebates, make for a perfect time to grab that new Wrangler JL. That is, if you are not already sold on the Gladiator.

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