Chrysler to Introduce New Full-Size SUV Next Year

6 June 2005

The Detroit News reports that Chrysler plans to introduce its first sport utility vehicle as part of a major rollout of new models in 2006 aimed at building on the automaker’s recent successes.

The SUV will be based on the current, seven-seat Dodge Durango but will be more upscale and is expected to debut at the Detroit auto show in January, said a Chrysler official familiar with the plan.

The project signals Chrysler remains bullish on the large SUV market despite a recent thaw in demand for big, truck-based SUVs such as the Chevrolet Tahoe, Ford Expedition and Toyota Sequoia.

“Thaw in demand” is an interesting phrase to describe a 25% drop in industry sales of full-size SUVs in May and a 20% drop for the first five months of year. (Earlier post.)

Redesigned in 2004, the Durango has been a brisk seller (chart at right). For the last two months, however, sales of the model have dropped to or below levels in 2003—i.e., prior to the redesign. From May 2005 to May 2004, Durango sales dropped 41%. That noted, the SUV is still a strong seller, and Chrysler has been performing the best, in terms of increasing sales, of the traditional big three automakers.

So it will be interesting to see how the market responds to this new luxury full-size SUV. My guess is not well—certainly not by the time next January rolls around.

This fall, Chrysler will launch the Jeep Commander, a seven-passenger luxury SUV for its rugged off-road brand. The vehicle could be an indicator of whether the automaker’s customers are willing to shell out $40,000 or more for an SUV when they’re used to paying less for Chrysler, Dodge and Jeep products.

Chrysler has to be careful that a new upscale Chrysler SUV does not eat into Commander sales, said Jim Hall, an industry analyst at AutoPacific Inc. in Southfield. It's risky, Hall said, because Jeep- and Chrysler-brand vehicles are often sold at the same dealerships, while Dodge vehicles are sold at separate stores.

“If a Chrysler-branded SUV hurts Durango, that’s actually OK because you’re substituting for a higher-profit unit,” Hall said. “But that’s not the issue. The issue is in a given showroom, have you suddenly made the Commander less of an upscale product?”

The other issue, of course, is how attuned the market has become in another year to actual, not relative, fuel efficiency.