Jeep’s next production move hinges on Trump’s trade agenda

Stellantis — parent company of Jeep, Ram, Dodge, Chrysler, and more — is awaiting a clarity on President-elect Donald Trump’s policy plans before locking in its future production strategy.

The details: The critical component of Stellantis’ production strategy – somewhat in limbo – is centered on the next iteration of the Jeep Cherokee. The automaker ceased production of the Jeep SUV in 2023 and is now pondering its future manufacturing plans for the Cherokee replacement. The key consideration is President-elect Trump’s threats to impose tariffs on Mexico, Canada, and China.

• The Jeep Cherokee was previously built at Stellantis’ plant in Belvidere, Illinois, which was shuttered by former Stellantis CEO Carlos Tavares.

• Antonio Filosa, head of Stellantis’ North America operations, says the carmaker is exploring several options to build the Cherokee replacement (which is expected to be a hybrid), including a potential site in the U.S.

• Stellantis currently has major production operations in Mexico and Canada, including a truck facility in Saltillo, Mexico, considered a “relief valve” for a U.S. truck factory expected to reach capacity in the future.

Between the lines: The future outcome of these production plans will likely prove pivotal to Stellantis, as the automaker looks to turn around its sales decline and U.S. market share, which has impacted its fleet and retail business.

• As of November, Jeep sales were down 36% from before the pandemic.

• Stellantis’ overall market share fell from 12.6% in 2019 to 9.6% in 2023.

• Sales for compact to midsize SUVs – which is where the Cherokee replacement will fit – are on the rise, with mid-size and compact SUVs accounting for about 34% of light vehicle sales (as of early 2024), as more car buyers ditch bigger vehicles for smaller ones.

Bottom line: Vehicle pricing, which is significantly impacted by production costs, has been a major issue for Jeep and Stellantis overall over the past few years, adding to the frustrations of its dealer body. That said, given that tariffs could potentially add to a vehicle’s cost overall, Stellantis is weighing its production options very carefully.

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