As the SUV field grew crowded with attractive offerings not just from GM and Ford, but also from BMW and Toyota. Chrysler invested lavishly to stay ahead. In January 1999, when the company unveiled the latest version of its Grand Cherokee at Detroit’s annual auto show, Robert Eaton, who had negotiated Chrysler’s sale to Daimler-Benz and at the time was co-chairman of DaimlerChrysler with Schrempp, stood on a stage with a bag. He boasted that the new model shared so few parts with its predecessor that all the common components could fit inside.
That free-spending attitude had become popular among Chrysler’s top brass starting around 1996, recalls Richard Schaum, a Chrysler veteran who is the company’s top executive in charge of engineering: Between 1998 and 2000, Chrysler’s capital expenditures as a percentage of sales rose to 8.2 percent, according to J.P. Morgan, second only to Volkswagen AG among the world’s major auto brands and significantly higher than Ford, GM and even Mercedes.
The attitude was evident in the two redesigns of the next-generation Grand Cherokee that greeted Zetsche and his team when they arrived in fall 2000. One version would be longer than the current model. The other would be even bigger and, like Ford’s new Explorer and GM’s new Chevy TrailBlazer, would have a third row of seats.
This would not be a true Jeep, Zetsche recalls thinking. It would be far too large to convey this agility and fun-to-drive [character] which is actually part of the Jeep Grand Cherokee. Last January, he ordered the Grand Cherokee team to come up with a better idea.
In February, Zetsche hired from Ford Schroer and Murphy, two marketers known in the industry for their preoccupation with targeting younger buyers and with building strong brands. On May 25, Zetsche and his top several executives gathered in a conference room at Chrysler’s headquarters here and set about applying that marketing strategy to the development of new cars and trucks. Around this time, Zetsche announced to his deputies his goal of expanding sales by one million vehicles. "Let’s start with Jeep," he said, the brand that he expects will supply about 300,000 of those additional annual sales.
By the end of the session, they had decided the best way to expand the Jeep brand was on the low end. They envisioned a small model, helping Chrysler to meet the federal government’s fleet-average standards for fuel economy by offsetting the company’s bigger, thirstier trucks. It would be designed to fit with minimal retooling on an existing assembly line. It would be utilitarian rather than luxurious, so it could be priced inexpensively enough to woo "Millennials" the next big wave of auto buyers, now no older than 22 to the Jeep brand. And it would spawn several derivatives, spreading development costs over thousands more sales.
So the group tinkered with the design, using a smaller engine but trying to maintain the vehicle’s pep by reducing its weight. One way to do that popped into Kukucka’s mind in the middle of the night soon after that meeting. He jotted it down on a notepad he keeps beside his bed. Rather than carpeting, the vehicle would have a smooth floor. That also would save money, and it would seem more hip to a generation that prefers bare-wood floors to wall-to-wall pile.
The no-carpet idea was part of a presentation that Kukucka and his study team made to Zetsche and his deputies on July 25. It wasn’t the only detail that surprised the graying executives in the room. Instead of the two-door model initially envisioned by the older men, who in their own teenage years had lusted after sleek muscle cars, Kukucka’s team proposed a four-door version because they were convinced that Millennials want functionality and lots of room for their friends and gear. They suggested spending a bit extra to put a third shoulder seat belt in the middle of the back seat, in the belief that Millennials, having grown up in child seats and bike helmets, value safety.