DETROIT – Chrysler began shipping the new Jeep Cherokee on Tuesday, giving dealers a long-awaited entry in the fast-growing compact crossover SUV market.
Distribution of the Cherokees had been delayed while Chrysler engineers tinkered with the new nine-speed automatic transmissions to make them shift more smoothly.
Company spokesmen confirmed that trucks hauling Cherokees began leaving a Toledo, Ohio, factory on Tuesday morning, heading for Jeep dealers across the nation.
At Golling Chrysler-Jeep-Dodge-Ram in Bloomfield Township, Mich., north of Detroit, employees waited eagerly for the first truckload of Cherokees to arrive Tuesday afternoon.
Owner Bill Golling said the delay in shipping probably cost Chrysler hundreds of millions of dollars in revenue because the company books the sale when it ships cars to dealers.
It shows the company is more concerned about quality than short-term profits, he said.
“The temptation would have been there in the old days to ship the car and get the money,” he said. “That’s not the way it is any more.”
Cherokees are far more sleek-looking than the boxy model they replaced, the Jeep Liberty. That will help them go head-to-head with the top sellers in the compact crossover market, the Honda CR-V and Ford Escape.
The compact crossover segment is among the fastest-growing in the U.S., with sales more than quadrupling in the past 13 years to more than 1.6 million, according to LMC Automotive, an industry data and research firm.
The segment is important to U.S. automakers trying to take sales from the Japanese companies that have long have dominated the market. The segment’s growth rate is second only to midsize crossovers such as the Toyota Highlander and Ford Edge.
Dealers have been clamouring for the Cherokee since the summer. Several reported getting orders in advance.
“We’re anxious to get it,” said Russell Barnett, owner of a Jeep dealership in Winchester, Tenn., southeast of Nashville. “The Cherokee name has quite a reputation with it that we think will add several sales to our business.”
Barnett, who also owns Ford and General Motors dealerships, said other brands are selling a lot of compact crossovers in his area. “Right now, on the Chrysler side, we’re kind of missing that market,” he said.
Chrysler originally planned to start deliveries between July 1 and Sept. 30. But distribution was delayed while engineers tried to smooth out the new transmission.
Chrysler built about 12,000 Cherokees but held them at the plant, at rail yards and other locations around the country until the transmission computer-control software could be updated.
Short delays are common in the auto industry as automakers hold new models at factories until they can fix problems. But longer delays have hit Chrysler especially hard in the past year, first with a freshened Ram pickup and then with the Jeep Grand Cherokee large SUV.
Those delays were responsible for a 65 per cent decline in Chrysler’s first-quarter earnings. Along with the Cherokee issues, the delays caused Chrysler to cut its sales and earnings forecasts for the year. The Auburn Hills, Michigan-based company now expects to ship 2.6 million vehicles worldwide in 2013, at the low end of its goal of between 2.6 million and 2.7 million. It expects to earn between $1.7 billion and $2.2 billion, down from its previous target of around $2.2 billion.
CEO Sergio Marchionne said after the second-quarter earnings that the delays were due to growing pains as the company moved from making 1 million cars and trucks in 2010 to more than 2 1/2 times that this year.