Detroit's First New Car Factory In Three Decades Produces The Three-Row Jeep Grand Cherokee

Summary

• Only three new US car factories were built and completed in 2021, and Stellantis opened the only new one in the Detroit area, the first such in three decades.
• This new factory catapulted Stellantis and its Jeep brand into the growing market of 3-row SUVs, with a long-wheelbase version of the Grand Cherokee.
• Forget the old Jeep Grand Cherokee that you have known for decades. This new one plays at a whole new premium level. The interior is high-end.
• Stellantis, therefore, now went from the lovable but old Dodge Durango to two all-new 3-row entries in the large SUV market. Addressable market expansion!
• I estimate an incremental 150,000 units for the US market alone, from these Stellantis expansions. That compares favorably with recent new car company IPOs.
• Looking for a helping hand in the market? Members of Auto/Mobility Investors get exclusive ideas and guidance to navigate any climate. Learn More »

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NOTE: A version of this article was first published on or about January 2, 2022, on my Seeking Alpha Marketplace site.

There are not all that many new fully integrated car factories built in the U.S. every year. In most years, none is built.

In 2021, it looks like at least three new car factories were completed and production commence before the 2021 calendar year was over:

• The Stellantis (NYSE:STLA) factory in Detroit, Michigan, which started manufacturing the Jeep Grand Cherokee L in March 2021, and the regular wheelbase (non-L) at the end of the third quarter.

• The Toyota-Mazda joint venture factory in Alabama, which started production of the Toyota (TM) Corolla Cross in the third quarter of 2021.

• The Lucid (LCID) factory in Arizona, which started production of the Air sedan in the second half of 2021.

A would-have-been fourth one, Tesla (TSLA) in Austin, TX, was originally scheduled to be completed in July 2021, but after multiple delays, appears to have just missed the 2021 deadline, as it may start production in early 2022 instead: Report: Tesla Giga Austin To Start Production Next Week

It is supposed to start producing the Model Y, and subsequently the Cybertruck perhaps as early as this year or 2023.

For those who may ask: What about Rivian? (RIVN) The Rivian factory was already a car factory, so while it was renovated in order to handle the production of an entirely new set of vehicles, it doesn’t count for the purpose of this list.

The first new car factory in Detroit in three decades

This article is about the new Stellantis (STLA) car factory in Detroit, which commenced operations in March 2021, but which has its roots all the way back to 1916, where various automotive components were manufactured over the decades. The number of twists and turns in terms of what was produced in this factory during this century, starting in 1916, are too many and too complex to bother spelling out right here, but for a fuller history I recommend this article: Jeep's Mack Avenue Assembly Plant Gets a New Lease on Life - The Detroit Bureau

Suffice it to say that in the last couple of decades, this factory had been producing V6 and V8 engines that go into a variety of Stellantis brands such as RAM, Jeep, Dodge and Chrysler. Those automotive final assembly factories were in turn located mostly in and around Detroit and Michigan Geographically, this new final assembly factory is located essentially next door to the factory that makes the Jeep Grand Cherokee and Dodge Durango: Jefferson North Assembly - Wikipedia

Long in the making: Three-row Jeep for the US market

Jeep had toyed with the idea of a three-row version of the Grand Cherokee since the mid-1990s, but the concept design never left the drawing board. Either there was not enough money to fund the project, or the market for a three-row off-road worthy SUV in this size class was not considered to be large enough for profitability - clearly, something that was disproven without any doubt, in the last decade or more.

However, after 2011, the group’s finances started improving rapidly and the market for three-row SUVs in this size class was growing very large. After honing the design in the studio, Jeep started developing this vehicle - an all-new generation Grand Cherokee, including a three-row version, around 2015. It is this new vehicle which saw its production commence in this new Detroit factory in March 2021.

In terms of the platform, chassis and overall (electrical) architecture, the “old” Jeep Grand Cherokee that was produced until 2021 was unusually old in the tooth. Its underpinnings harkened back far longer in time than most new cars.

All-new from the ground up: Jeep Grand Cherokee

This three-row Jeep Grand Cherokee - the first three-row such ever - marks a sharp break with the outgoing Grand Cherokee except for one thing: The powertrain. The engine-transmission combinations are essentially carry-over, although a new plug-in hybrid version will be added in the first half of 2022.

Everything else is new, however: Chassis, suspension, interior, exterior, electronics - everything. The so-called “driving dynamics” are a huge step up compared to the outgoing Grand Cherokee - steering, handling, suspension, etc., are all much better than the old generation Grand Cherokee. You would not think that these two generations of vehicles are related - and that’s because except for the engine-transmission, they aren’t.

The first thing you will notice about the all-new Jeep Grand Cherokee are two things about its design:

1. This long-wheelbase version is indeed much longer than any previous Grand Cherokee. Optically, it almost looks like a bus in comparison: It’s just long - but not in a bad way.

2. Long or not, it looks great! While it has the iconic seven-slot grille in common with all other Jeeps, it sure doesn’t resemble the outgoing Grand Cherokee at all. Describing a design in words is hard, but it looks more sophisticated and upscale than any Jeep that preceded it (other than the totally different Wrangler and Gladiator models, as they circle in a completely different design orbit).

One of the areas where Jeep has been shining in the last few years is in terms of interior ergonomics, especially the cockpit controls. Jeeps are simply easy to use, compared with many other brands. Of course, Jeep is not the only brand that excels in this area - I would argue that Hyundai and Kia also nail this category.

As a result, there is very little to talk about with respect to the all-new Jeep Grand Cherokee L (L stands for “Long” as in “Long Wheelbase”) other than design. Why? Because getting into the vehicle, adjusting the controls, and getting ready to drive it for the first time happens with less of a learning curve than almost anything else on the road today: Basically, just get in and go - with better-than-average ease.

A new level of ride/drive comfort

The outgoing Jeep Grand Cherokee was an acceptable compromise between off-road chops and decent road manners. Still, it was clear that, unlike other SUVs that entered the market in the last half-decade, it did not have the same level of steering, handling and ride comfort. It wasn’t terrible by any means - and certainly up to the standards of a decade ago - but 2021 is not 2011.

In this new Jeep Grand Cherokee L, I could not detect any such compromise. The Grand Cherokee retains its off-road chops, but when driving it on paved roads, it’s as sharp and smooth as pretty much any other crossover-SUV in the market today.

Financial impact to the Stellantis Group

Until 2021, the Stellantis Group had not been selling any 3-row SUV in the U.S. market other than the Dodge Durango. If you wanted any other 3-row product from the group, you had to buy the Chrysler Pacifica, which thankfully and finally became available with all-wheel drive in 2020.

Yet, the Chrysler Pacifica has essentially zero off-road abilities, compared to any other car or minivan, AWD or not. So it doesn’t count as an “SUV.”

In the U.S. market alone, approximately two million 3-row SUVs are sold every year. Jeep had not participated in this segment until mid-2021. Then, within a mere quarter, Jeep began deliveries of not only one 3-row SUV nameplate - but two:

• The aforementioned Jeep Grand Cherokee L.

• The Jeep Wagoneer, which saw its production commence in another Detroit area factory also in the third quarter of 2021.

The Jeep Wagoneer

The Jeep Wagoneer is an even more totally new product for Jeep. Unlike the Grand Cherokee L, it is not manufactured in an all-new factory, but rather in an existing factory nearby, also in Detroit.

The Jeep Wagoneer goes up against the other large body-on-frame 3-row SUVs, principally the ones from General Motors (GM) and Ford (F):

• Chevrolet Tahoe

• Chevrolet Suburban

• GMC Yukon

• Cadillac Escalade

• Ford Expedition

• Lincoln Navigator

There are other large 3-row body-on-frame competitors also, that sell in smaller quantities:

• Nissan Armada

• Infiniti QX80

• Toyota Sequoia

That is in contrast to the Jeep Grand Cherokee L, which faces a far broader competitive field across mass-market and more premium brands alike:

• Toyota Highlander

• Chevrolet Traverse

• Ford Explorer

• Honda Pilot

• Kia Sorento

• GMC Acadia

• Volkswagen Atlas

• Subaru Ascent

• Dodge Durango (Stellantis’ own previous-gen sister vehicle)

• Kia Telluride

• Buick Enclave

• Nissan Pathfinder

• Acura MDX

• Hyundai Palisade

• Volvo XC90

• Infiniti QX60

• Audi Q7

• Mazda CX-9

• Mercedes GLS

• BMW X7

• Tesla Model X

• Cadillac XT6

• Land Rover Discovery

To recap: Stellantis takes on 3-row SUV segment

In the first nine months of 2021, Stellantis sold 52,931 units of the Dodge Durango - its only 3-row SUV in the US market until the second quarter of 2021:

Stellantis Media - FCA Reports Third-quarter 2021 U.S. Sales

While Stellantis sold 189,727 units of the Grand Cherokee during this time, it does not break out 2-row vs 3-row sales numbers and may not do so in the future. Wagoneer sales started only at the very end of the third quarter of 2021, so we do not yet have reliable numbers available.

On an annualized basis, one can certainly envision US sales of around 100,000 3-row Jeep Grand Cherokees and almost half as many Wagoneers. Considering the valuation of many entirely new car companies in the stock market today, many of whom have not yet sold a single vehicle, that likely means Stellantis is adding many billions of dollars in value by coming to market with these new vehicles in 2021. It just isn’t getting anywhere near the same level of credit for these accomplishments.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

At the time of submitting this article for publication, the author had no positions in any of the companies mentioned. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers. Stellantis hosted product introductions.