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Will Jeep Go Chinese? | Any Tech news
Home / Auto / Will Jeep Go Chinese?

Will Jeep Go Chinese?


Let’s begin with Fiat Chrysler’s “response to market rumors” that China’s Great Wall Motor Company is interested in buying the Jeep brand.

“Fiat Chrysler Automobiles confirmed that it has not been approached by Great Wall Motors in connection with the Jeep brand or any other matter relating to its business.”

The double-negative-intensive release, issued from London Monday morning, goes on to note that Fiat Chrysler “is fully committed to its 2014-18 plan, having achieved each one of its targets to date and with only six quarters left in its completion.”

But Fiat Chrysler CEO Sergio Marchionne, who retires next year at age 65, has openly sought a suitor for his eight-year-old car company for the last couple of years. He courted General Motors’ Mary Barra to no avail, and is rumored to have approached Volkswagen Group years after he fended off the German giant’s then chief, Ferdinand Piech, who once wanted to take Alfa Romeo off his hands.

Marchionne suggested last April that it would be possible to separate Jeep from the rest of the company. Fiat Chrysler also has indicated it may spin off Alfa Romeo and Maserati.

Prompting Fiat Chrysler’s “response to market rumors,” Great Wall Motor President Wang Fengying told Automotive News in an email that her employer “intends to buy Jeep and is ‘connecting with FCA’ to begin negotiations,” the industry weekly reported Monday morning.

“There are many levels of engagement,” Michael J. Dunne, an analyst/consultant specializing in the Chinese automotive market, told me. “It’s likely early in the process, so Fiat Chrysler looks to leave that door ajar for other potential bidders.”

Great Wall Chairman Wei Jianjun “has made no secret” he wants to make his company the world’s number-one SUV brand, Dunne says. “They’re already tops in China selling more than 1 million SUVs a year.”

According to Automotive News, in its Monday article by Larry P. Vellequette, Sharon Silke Carty and Yang Jian, Great Wall opened a Detroit research & development facility this year, and has another in Los Angeles, and is reportedly reconsidering an assembly plant in Mexico because of President Trump’s campaign pledge to renegotiate the North American Free Trade Agreement (NAFTA). Great Wall hopes to build and sell its Haval brand sport/utilities in the U.S. eventually, AN says. The publication notes that Jeep’s global sales have jumped from about half a million in 2008 to about 1.41-million last year under Marchionne and Fiat Chrysler ownership.

“What’s missing is a brand name people can know and trust,” Dunne says. “Getting Jeep would clinch global supremacy.”

And it would net Fiat Chrysler more than selling all of Fiat Chrysler, according to Morgan Stanley analyst Adam Jonas, who last week valued all of Fiat Chrysler at $32 billion, and Jeep alone at $33.5 billion. Yes, Jonas is better known as the Tesla cheerleader who has called the electric car company’s market cap, currently $56.4 billion, seriously undervalued.

So what happens to the rest of Fiat Chrysler if Great Wall buys Jeep? If Fiat Chrysler also spins off Alfa Romeo-Maserati, that leaves Fiat, Dodge, Ram and Chrysler. Many others before me already have compared this point in Jeep’s 76 years, if indeed it is sold separately, to Chrysler buying AMC in 1987. After a few years of building Renault-based models and experimenting with the Eagle brand, Chrysler eventually stripped the purchase down to Jeep, the only brand that would have survived the 2009 bankruptcy without the federal government guaranteed loan/bailout.

Ram’s appeal is as a North American-only brand. Its prime quality is the size of profit margins from full-size pickup trucks, which don’t have a significant market outside of NAFTA. Ram should appeal to VW Group, Toyota, Nissan, and Hyundai.

Fiat has been struggling with small models in a cheap gas economy in the U.S. since its return here. It’s having a slow go of it in Europe, outside of its home country and such Central European countries as Poland, where it assembles the 500. If it doesn’t get some new product on the market soon, including an update or replacement for the 500, it has a tough road ahead in light of the quickly changing automotive landscape and the reliance on premium and luxury brands for sustainable profit margins.

That leaves Dodge and Chrysler. While Dodge says it has good success among young families with its Charger sedan, the Durango plays poor second-fiddle to the Jeep Grand Cherokee, while the Journey is well past its expiration date. The Challenger is also getting quite old, and like the Charger, is supposed to go to the smaller rear-wheel-drive Alfa Romeo Giulia platform by the end of the decade, though that part of Fiat Chrysler’s plan is fluid if it sells Jeep and spins off Alfa-Maserati.

Chrysler has a hit in its new Pacifica minivan, but who will buy Chrysler for one healthy model? Google’s Waymo? There’s also the RWD Chrysler 300, a semi-premium sedan that I still really like and wish would be replaced with another RWD model. That’s not going to happen under Fiat Chrysler, though it may be possible if a smaller Chinese or Indian company wants to buy a storied piece of the corporation for a small fraction of Jeep’s potential price.

On the other hand, Chrysler’s been on the ropes before, including several times well before Lee Iacocca procured its first federal loan guarantee in 1980. Chrysler with Ram and Dodge is still a full-line company. Selling Jeep for more than what Fiat Chrysler is worth could provide it with the kind of product development money necessary to rebuild itself into an automaker well poised to meet the demands of the emerging highly autonomous, highly electrified, shared-drive market.



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