By Colum Murphy
BEIJING--After years of lost ground, Jeep is hoping locally
produced vehicles will help it make inroads into China's booming
market for sport-utility vehicles.
Fiat SpA and its Chrysler Group LLC arm expect to build Jeep
vehicles in China for the domestic market starting in late 2015,
the two companies said Saturday.
They will manufacture Jeep vehicles in the world's largest car
market through a joint venture between Fiat and its Chinese
partner, Guangzhou Automobile Group Co., the statement said. China
is the largest market for Jeep outside of the U.S.
While Jeep was among the first foreign brands to sell cars in
China, it has struggled in its effort to build vehicles here.
Production in China began in 1983 but ceased in 2006 just before
Jeep's owner, Chrysler Group, was split from Daimler AG. Daimler
kept a facility in Beijing that had assembled Jeeps.
Now, Jeep is in catch-up mode. Growth of the sport-utility
vehicle market in China has been explosive. Sales of the vehicles
in the country grew 49% to about three million last year, according
to data from the China Association of Automobile Manufacturers.
Yet Jeep sold only around 60,000 vehicles in 2013. By contrast,
it sold more than 731,000 vehicles world-wide, up 4% from a year
earlier.
Without a local production facility in China, foreign car makers
find it difficult to sell in large volumes and imported cars are
less competitive in the market as they are subject to duties. Jeep
sells the Wrangler, Grand Cherokee and Compass in China. Some
high-end Jeeps can sell for as much as $205,000 in China, more than
triple its price in the U.S.
The new agreement with Guangzhou Automobile should help Jeep get
back on track, although China's SUV market is becoming increasingly
crowded as more car companies--foreign and Chinese--look are lining
up products to aggressively target the segment.
James Chao, Asia-Pacific director for consultancy IHS
Automotive, said Jeep has revamped its product portfolio to create
a more fuel efficient lineup. "I expect them to do well in China
given the overall boom in SUVs here and heightened concerns about
the environment. He said that while current volumes in China are
small, Jeep's brand is strong in the country.
Saturday's statement didn't offer details on the models that
would be manufactured by the joint venture, known as GAC Fiat,
saying only that three Jeep models would be produced. One of the
models is expected to be the new Renegade subcompact SUV presented
at the Geneva motor show earlier this year.
GAC Fiat currently produces Fiat sedans Viaggio and Ottimo at
the joint venture's plant in Changsha in central China.
"Today's announcement represents the next chapter in the proper
utilization and expansion on a global scale of the Jeep brand,"
said Sergio Marchionne, chief executive officer of Italy-based
Fiat. "Equally important is our continued development in the
Chinese market with an established and respected partner such as
Guangzhou Automobile Group," said Mr. Marchionne, who is also
chairman and CEO of Chrysler Group, whose headquarters are in the
U.S. Fiat plans to create a holding company for its merged
operations, Fiat Chrysler Automobiles NV, this year that would be
based in the Netherlands.
GAC Group Chairman Zhang Fangyou said Saturday that the latest
step for Jeep "will enhance the sustainable development of the
joint venture, and will surely bring premium experiences of driving
and services to the Chinese customers."
Rose Yu in Beijing and Christina Rogers in Detroit contributed
to this article
Write to Colum Murphy at colum.murphy@wsj.com
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