Possible Sale of Chrysler Puts Focus on Jeep

The sale of Chrysler by private equity owner Cerberus is most certain. But there is one brand in the Chrysler stable that arouses the most interest among suitors.

“Whoever buys Chrysler is buying it for Jeep,” said Gordon Wangers, an independent auto consultant based in San Diego. He said that General Motors, one of the possible buyers of Chrysler, would be able to bolster its Hummer brand, for which it built enormous dedicated dealerships for but has failed to perform.

GM put Hummer up for sale in June, but so far has struck no deal. As recently as last week, GM reportedly sent out a sales prospectus for the three-model line, which was down 47.3% in sales through September, per Autodata, Woodcliff Lake, N.J.

“By incorporating Jeep with Hummer, you just revitalized the Hummer brand,” said Wangers, who formerly was president at consultancy AMCI, Vista, Calif., which worked with GM and Chrysler. “And you have Jeep, a brand with worldwide appeal.”

France’s Renault-Nissan also is reportedly interested in Jeep, perhaps in concert with the GM purchase.

With Jeep comes $550 million a year in retail sales for its licensing business for more than 1,000 products, as well as an established truck brand. While Jeep sales are down 26% this year, per Autodata, it’s a brand with worldwide recognition.

“After you get Chrysler, you take Jeep and the minivans, and get rid of the rest,” said Peter DeLorenzo, a former auto ad exec and publisher of autoextremist.com. He noted that Jeep’s marketing would likely be reevaluated after such a move.

“They would certainly see if anyone can do a better job,” DeLorenzo said. Last year, Jeep moved its creative duties from BBDO, Detroit and New York, to Cutwater, San Francisco.

A combined Chrysler/General Motors would affect 19% of all auto category advertising in the U.S. from last year, online spending excluded, per Nielsen Monitor-Plus. GM spent more than $2 billion, while Cerberus spent $1.3 billion.

What any buyer of Chrysler would get is “this terrible mistake” that Cerberus made in the first place by buying Chrysler from Daimler last year, said Gerald Meyers, former CEO of American Motors.

“Cerberus never should have gotten into Chrysler and will pay a price to get out,” Meyers said.