US car giant Jeep has offered its Australian dealer network 10-year franchise agreements, says it’s here to stay.
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EXCLUSIVE

US car giant Jeep is in the process of signing its Australian dealer network to 10-year franchise agreements with a commitment the brand is here to stay – despite posting five years in a row in sharp decline and the lowest sales results in 11 years.

Jeep sales in Australia peaked in 2014 – when more than 30,000 cars were reported as sold – but last year the company delivered just 5500 vehicles.

While there has been speculation about the local future of Jeep’s other stable of brands which have also experienced sales slowdowns – Chrysler, Fiat and Alfa Romeo – the company says it is “definitely” committed to its other historical marques as it doubles down on its off-road icon.

Jeep representatives have offered dealers across Australia 10-year contracts that have been described to CarAdvice as “five year contracts with an automatic renewal for another five years”.

Under Australian law, Jeep must give dealers at least six months notice to renew or not renew franchise agreements.

While some Jeep dealers have not renewed their existing contracts – and some Jeep showrooms will close or switch to other brands – the 10-year offer is seen as a sign that the company is not about to wind down operations here.

Representatives for Jeep Australia confirmed the negotiations of the 10-year dealer agreements “to give dealers peace of mind for the future”.

Last month the boss of Jeep Australia said the US was “utterly committed to right-hand drive”.

“That is the reason why there is so much focus on Australia now, and we should be playing a bigger role,” Jeep Australia boss Kevin Flynn told CarAdvice last month.

“Australia has not been a place that we can celebrate success recently and Detroit wants Australia to succeed.”

Jeep sales are currently a fraction of what they were 11 years ago even though, in that time, the Australian new-car market has grown by 13 per cent.

More worryingly for Jeep, SUV sales in Australia have increased by 156 per cent since 2009 – and yet the brand hasn't been able to capitalise on that massive growth.

“We can only change what is going forward,” said Mr Flynn. “And that starts with understanding the reasons Jeep was once a big player in the Australian market, but that’s not the case now. What was the cause?”

Key to Jeep’s revival is the new generation Grand Cherokee, available in two different body styles – a five-seater and a seven-seater – and the introduction of a new as yet unnamed mid-size SUV to be made in India. Both are due within the next two years.

The Jeep Grand Cherokee seven-seater is likely to arrive first, in March 2021, about three months before the five-seat version goes on sale locally.

In the interim, Jeep plans on simplifying the Wrangler/Gladiator range and Compass/Cherokee/Grand Cherokee models to make it easier for dealers to exchange stock and reduce delivery delays.