FCA to idle Jeep Cherokee plant to reduce inventory backlog

Byron Hurd

FCA will shut down the Belvedere, Ill., facility where the Jeep Cherokee is produced for two weeks starting Monday, the company announced late Thursday, as it looks to decrease inventories of some of its volume vehicles in the face of slowing sales. 

The lines will be idled through Jan. 27 — two weeks — to reduce what Automotive News estimates is a 53,000-unit inventory. The facility was also shut down briefly back in August for the same reason, and according to the Rockford Register Star, approximately 1,400 workers were laid off in 2019 — more than 1,300 in February when a shift was eliminated, followed by another ~30 in May.

Cherokee volumes dropped 20 percent, from 239,437 in 2018 to 191,397, in 2019. The slide was even worse in the fourth quarter, where sales dropped 30% from their 2018 levels. The SUV's sales have been somewhat volatile for several years, rising and falling by tens of thousands of units. The 2018 figures were a high-water mark for the current generation of the nameplate.

Crossovers and SUVs like the Cherokee, along with pickups, buoyed the U.S. auto industry in 2019, but weren't enough to keep overall industry sales from slipping to 17.1 million units, from the post-recession peak of 17.5 million units sold in 2016

FCA's decision to idle the Cherokee facility shows that even popular segments are feeling the squeeze as the U.S. industry reaches a new equilibrium point. The seasonally adjusted, annualized rate (SAAR), which projects 12-month sales based on current trends, dipped below 17 million after December, which was lower than analysts projected. At this rate, the industry could end the year with fewer than 17 million sales for the first time since 2014. 

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