Gladiator's tough opponent: Price

DETROIT — The Jeep Gladiator, known for its off-road prowess, has another rock to climb: its price.

While Jeep has cashed in on the Wrangler's do-it-all image in recent years with few incentives, FCA US is showing a greater willingness to throw money on the hood of the Gladiator, which is based on the Wrangler and has the highest starting price among midsize pickups.

Some dealerships already are offering discounts of up to $9,000 on the Gladiator less than a year after its release, according to shopping site CarsDirect. In a dealer bulletin obtained by Automotive News, FCA offered support starting in mid-January in the form of $2,000 bonus cash on all but the Rubicon trim. Jeep's website listed a $2,000 sweetener available in certain regions through March 2.

Some dealers say Gladiator sales have slowed after a blazing start that saw early adopters scooping up higher-end trims. But they aren't ready to panic yet.

The increased discounting suggests that Jeep wants the Gladiator to challenge the Ford Ranger and Chevrolet Colorado in volume rather than be just a niche entry, said Jeffrey Burnett, general manager of Millsboro Chrysler-Dodge-Jeep-Ram in Delaware.

"At first when we talked about the launch and everything else, they weren't coming in this place saying we're going to attack Ranger," Burnett said. "They came to this place saying we're going to have a vehicle unlike anybody else. Now I think they're going into, 'You know what? We can attack Ranger; we can attack [the Nissan] Frontier.' "

Burnett said his store is selling 15 to 25 Gladiators a month, which isn't far off from its numbers for the Wrangler and light-duty Ram. Nationally, Gladiator sales peaked at more than 6,000 in October before falling back slightly in November and December, according to estimates from the Automotive News Data Center, while sales of the Wrangler and Ranger increased as the fourth quarter went on.

Brian Heney, COO for Kelly Automotive Group in Danvers, Mass., said the Gladiator started out "super hot, and it cooled off a little bit," so he understands FCA trying to keep the momentum going. Kelly Jeep-Chrysler is offering discounts of more than $5,700 and selling about a dozen Gladiators a month.

Heney said he's not surprised FCA is offering incentives on the Gladiator because January and February are usually the most challenging months, and "we find that most of the manufacturers recognize this and support the dealer network in an effort to maintain a normalized level of business and create some added excitement," Heney told Automotive News.

He hopes the Gladiator doesn't end up in the same situation as the 2018 Wrangler, which Jeep overproduced, resulting in it having to discount the nameplate for the first time in years. "If that became the same situation for the Gladiator in the summer where they're having to discount it to keep it as a hot model, I'd be a little bit nervous about that," he said.

The base Gladiator Sport with a manual transmission starts at $35,040 including shipping, vs. the low $20,000s for the Colorado and the mid-$20,000s for the Ranger and the segment-leading Toyota Tacoma.

The top-of-the-line Gladiator Rubicon starts at $47,040 with an eight-speed automatic transmission and tops $60,000 fully loaded. The new Desert Rated Mojave trim that debuted at the Chicago Auto Show last week will be in the same neighborhood as the Rubicon.

Chevy's incentive spending on the Colorado reached a 2019 high of $3,265 in November, while the Ranger got up to $3,923 in December, according to Motor Intelligence. Incentive spending on the GMC Canyon was more than $3,000 for nine straight months in 2019, closing the year with a high of $4,115.

Toyota is more conservative with the Tacoma. August, when spending reached $2,091, was the only time Tacoma incentives topped $2,000 last year, according to Motor Intelligence.

Steve Wolf, dealer principal at Helfman Dodge-Chrysler-Jeep-Ram-Fiat in Houston, said incentives on the Gladiator merely illustrate the competitive nature of the business. The competition has incentives that are "significantly higher than ours," he said, so dealers "need a retail/incentive message." Last week, his store was offering a loaded Gladiator Overland with a $3,923 discount on top of the FCA bonus cash, dropping the $56,700 sticker price to $50,777.

One dealer who asked not to be identified said the Gladiator has been pulling customers from the Wrangler, which is fairly close to the pickup's pricing. The dealer considers both vehicles to be overpriced.

"We were selling [Gladiators] until the last couple of months. We were actually selling the high-end stuff, but again, that's because of the newness of it, and everybody coming out to buy the one with all the equipment," the dealer said. "But let's call a spade a spade; $30,000 to $45,000 is the range that we should be in."

Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, said Jeep positioned the Gladiator as a lifestyle vehicle instead of a pickup. The Gladiator was tailored to make money, he said.

With as much profit as the Gladiator has baked into it, Fiorani said, there's room to offer incentives and spur more volume with a lower transaction price. FCA's $2,000 offer on the truck isn't a big deal in today's market, he said.

"If buyers wanted a pickup, there are plenty to choose from at all price ranges. But if you want a Gladiator, you're not looking for just another pickup, and you're willing to pay for the chance to stand out from the crowd," Fiorani said. "As the market begins to soften, finding people willing to pay extra for image becomes tougher, and price becomes more and more of a deciding factor. The timing of the Gladiator coincided with this softening of the market."