(Bloomberg) —
Stellantis NV is bringing back the Jeep Cherokee as a bigger, electrified SUV after a nearly three-year hiatus, plugging a crucial hole in its US lineup as it seeks to reverse a sales slump and navigate a market whipsawed by tariffs.
Jeep is trying to claw back share in the SUV market after six consecutive years of US sales declines. Former Stellantis Chief Executive Officer Carlos Tavares temporarily discontinued the Cherokee in 2023 as part of a plan to move production from Illinois to Mexico.
The vehicle has been off the market since, leaving Jeep with a gaping hole in the three-million-unit-a-year compact SUV segment that’s dominated by Toyota Motor Corp.’s Rav4 and Honda Motor Co.’s CR-V.
For its 2026 model-year relaunch, Jeep stretched the Cherokee’s dimensions, pitting it against larger SUVs such as the Toyota Highlander and Honda Pilot. Stellantis hopes to draw both shoppers from across the SUV spectrum, including the critical compact category.
“For any automaker worth their salt, it’s impossible to not have a car in that segment right now, because that’s what everyone is buying,” said Edmunds.com analyst Joseph Yoon. “As long as the pricing is competitive and the vehicle is compelling, I think Jeep has a shot.”
The Cherokee’s return is critical for new Stellantis CEO Antonio Filosa’s plan to introduce a slew of new products and reverse a 9% decline in Jeep sales last year. The rugged brand accounted for 5.9% of the US SUV market in 2024, less than half of its 13% peak in 2015, according to Edmunds.
Stellantis’ US shares rose 1.2% as of 7:49 a.m. before regular trading in New York. The stock tumbled 26% this year through Thursday’s close.
Freshened versions of the larger Grand Cherokee, Jeep’s top-seller, and the premium Jeep Grand Wagoneer, are expected to follow the Cherokee’s debut. The brand also plans to introduce an all-new Jeep Recon electric SUV this year.
Hybrid Debut
The 2026 Cherokee will go on sale late this year with a base price of about $37,000, including shipping fees. That’s roughly $3,000 more than the least expensive Rav4 hybrid, and about $4,800 less than the bigger Highlander’s starting price.
The new Jeep debuts with a gas-electric powertrain that gets an estimated 37 miles per gallon in combined city and highway driving, and more than 500 miles of range, according to Stellantis. The SUV is made in Mexico — meaning it will face tariffs on its non-US content — though its turbocharged four-cylinder engine will be built in Michigan.
Jeep chose to introduce the redesigned Cherokee as a hybrid first to take advantage of red-hot demand for vehicles that offer better fuel economy without a big price bump or the need to plug in a battery, said Jeep CEO Bob Broderdorf.
With President Donald Trump’s directives to roll back US fuel-efficiency rules, the company is now considering additional technology options, including more fuel-thirsty, powerful engines.
“We are going to have choice, we are going to have more power. You are going to see us have a lot of fun with these cars,” Broderdorf said at an event in Detroit earlier this month. “That is something historically we were known for, and we’re going to bring that back.”
Tariff Complications
Trump’s imposition of tariffs on imported autos and parts slowed the Cherokee’s return as executives scrutinized thousands of components to whittle down tariff costs.
A new version of the entry-level Jeep Compass is on hold. The company has been selling an older version of the small SUV made at its Toluca, Mexico, assembly plant that’s building the Cherokee to tap into demand for affordable models with new-vehicle prices nearing $50,000 on average.
Tavares moved production of the older Cherokee to Mexico in part to boost the vehicle’s slim profit margins, said Colin Langan, an analyst with Wells Fargo. But the lack of trade deals with Canada or Mexico to lower tariffs on finished vehicles and parts is overshadowing its future profit potential.
“Tariffs are murky and maybe there will be a reasonable settlement by the time this launches,” Langan said. “It still adds a cost that wasn’t there when you originally planned it.”
(Updates with stock performance in the seventh paragraph.)
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