Celebrity Death Casts Shadow on Hot Jeep Brand

Fiat Chrysler Faces Lawsuit, Scrutiny Over Shifter Design Flaw

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Anton Yelchin.
Anton Yelchin. Credit: Philippe Berdalle via Creative Commons
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Jeep, which has been a star performer for Fiat Chrysler Automobiles, has suddenly become a public relations problem for the automaker because of a celebrity death.

The brand was thrust into the media spotlight after "Star Trek" actor Anton Yelchin died on June 19 when he was pinned against a gate at home by his 2015 Grand Cherokee. The incident gave widespread attention to a recall the automaker announced in April covering 811,586 Grand Cherokees, Dodge Chargers and Chrysler 300 sedans. The vehicles, including Mr. Yelchin's Jeep, were equipped with a shifter that has been linked to accidents caused by the vehicles rolling away, even when drivers thought they were in park.

On Thursday, Jeep Grand Cherokee owners filed a class-action suit in federal court in California, alleging that Fiat Chrysler "purposefully kept consumers and its customers in the dark" about the shifter issue. A Fiat Chrysler spokesman declined comment on Friday because the company had not yet been served with the lawsuit.

It is a troublesome situation for a Jeep brand that as recently as May set an all-time monthly sales record with a year-over-year increase of 14%. Some auto analysts predict that the rugged brand will emerge unscathed. But the celebrity death adds a dimension not normally associated with recalls, resulting in some uncertainty.

"I don't think it will affect sales or the brand image," said Michelle Krebs, senior analyst for Autotrader. Still, the issue could gain traction if Mr. Yelchin's estate files a lawsuit, keeping it in the news, or if the class-action suit leads to more widespread legal actions, she added. But typically "these kind of [incidents] fade quietly and people don't think much about them in the longer term," she said.

Edmunds is forecasting Jeep's June sales will increase by 14.7% compared with June 2015.

One factor in Jeep's favor is that Grand Cherokee's shift lever was updated to a new design in model year 2016, so new vehicles don't have the problem. The company began equipping the Dodge Charger and Chrysler 300 with new shift-lever designs in model-year 2015.

Also, Jeep could be sheltered by the fact that its brand image has not relied on a hard-hitting quality message. Contrast that with Volkswagen, which has endured a major perception hit in the wake of its emissions-cheating scandal in part because VW's marketing had a big environmental focus.

"Jeep is a teflon brand," said Jessica Caldwell, director of industry analysis for Edmunds.com. "It consistently gets bad quality scores … but sales continue to climb. It's one of those brands that people buy regardless of whatever is going on in the outside world," she added. "It is very uniquely positioned in the market as that go-anywhere, do-anything true American … brand."

Even so, the class-action lawsuit sought to contrast the shifter problem with marketing Fiat Chrysler has done involving safety. Citations in the suit include a Jeep Grand Cherokee ad that touted "over 70 available safety and security features" (although there was no mention of shifting in the ad).

Auto recalls, which have become a routine practice, rarely affect sales, according to a 2014 study by the National Automobile Dealers Association. "Brand reputation only tarnishes when recalls are tied to numerous injuries or deaths and media attention is widespread," according to the study.

In those cases, brands with good reputations pre-recall have the most to lose because consumers penalize brands whose actions are out of character. "A severe recall decreases the market share of a low-reputation automaker by 1.6%, while a high-reputation automaker's market share declines by 2.9%," the study said, citing findings from a separate study published in a journal called Organization Science.

J.D. Power scores the quality of auto brands by the number of problems reported per 100 vehicles based on surveys given 90 days after purchase or lease. Jeep had a score of 113 problems per 100, according to the latest ranking published on June 22. That puts the brand on the bad side of the average score of 105. While Jeep improved by 28 points from the 2015 study, the brand remains far behind No. 1 Kia, which scored 83.

The attention on Mr. Yelchin's death could add a new dimension to Jeep's recall. "NBC Nightly News" recently ran a two-minute segment about the incident and recall. The piece noted that federal investigators have documented at least 212 crashes and 41 injuries related to the problematic electronic gear shifter.

"I believe the impact on Jeep should be bigger than a normal recall," Abhishek Borah, a marketing professor at the University of Washington, said in an email interview. The Jeep recall is amplified because of the "tragic and untimely death of a celebrity who was young, liked, respected, and who barely got started," said Mr. Borah, who co-authored a study published earlier this year about the effects of social media on auto recalls.

He also cited Jeep's "tardiness in issuing the recall in April this year after a long back-and-forth with the National Highway Traffic Safety Administration and almost a perfunctory notice to consumers of how to deal with the issue."

Still, Mr. Borah suggested that Jeep avoid doing any proactive advertising about the issue. "They are at fault and reminding people that they are sorry for it would just stoke the fire," he said.

Mr. Yelchin's death was ruled an accident by the Los Angeles county coroner's office. The Los Angeles Police Department is still investigating the incident, according to media reports. Fiat Chrysler in a statement said it "extends its deepest sympathies to the family and friends of Mr. Yelchin. The company will be conducting a thorough investigation of this tragic incident. It is premature to speculate on its cause at this time."

The National Highway Traffic Safety Administration opened an investigation into the shifter issue last August after getting 14 complaints alleging rollaway incidents, according to the agency.

Fiat Chrysler's April recall announcement said "no evidence of equipment failure was found." But consumer confusion has been caused by the fact that the shift levers return to the same center position after a driver selects a gear. The vehicles include warning chimes and alert messages if the driver side door is open, engine still running and the shifter is not in park. But an investigation "suggested these measures may be insufficient to deter some drivers from exiting their vehicles without selecting 'PARK,' " the April recall announcement stated.

The automaker recently sent dealers software meant to keeps affected vehicles from moving while the door is open and the shifter is not in park, Automotive News reported.