Beijing Jeep's bouncing fortunes contain many lessons

PUBLISHED : Monday, 05 June, 2006, 12:00am
UPDATED : Monday, 05 June, 2006, 12:00am
 

In its day, Beijing Jeep has been more than just a sturdy, boxy ride through the streets of the capital; it has symbolised America's dreams of selling the cars that rule the roads of China, as well as highlighting the dangers of the joint-venture system.


Beijing Jeep's fortunes in the cut-throat mainland industry have been as up and down as a speedy run sown some of the city's-side roads. Changing gears is like pulling elephant tusks, the suspension looks the part but does precious little to cushion you from Beijing's mean streets. Also, despite its impressive scale, the Jeep's cabin is deceptively small - there is no headroom to speak of. And yet the Beijing Jeep is a car that is easy to love, and is famous as an expatriate's car of choice in the capital. It's a much rarer sight in other Chinese cities, and all but unknown in Shanghai.


The jeep has lost market share to flashier brands in recent years but it remains a design classic. It is solid, and generally reliable. If it breaks down, there are parts available, and as the design doesn't change there are no worries about spare parts having become redundant.


There are famous pictures of Mao Zedong riding in a US army Willys Jeep, the forerunner of the Beijing version, which was the first car produced by the first US joint venture project in China when American Motors Corp (AMC) signed an agreement to build Jeeps in Beijing, back in the heady days of early Chinese capitalism in 1984.


Car-making was emerging as one of the four pillar industries at the time, international news magazines ran pictures of the Jeep dominating still empty streets in the capital and Beijing's leadership labelled the production facility 'a model joint venture'. Its future seemed assured.


Chrysler took over in 1987, amid some acrimony, but Beijing Jeeps were kings of an emerging sport utility vehicle (SUV) market for years, but the company became bogged down in heavy losses from 1998 to 2002. At one point, Beijing Jeep looked like a test case for how not to do business in China.


There were difficulties getting foreign currency to pay for imported parts, often stopping production, and the quality of the cars rolling off the line was decidedly mixed. Costs ballooned and production of the rather thin product offering - just two models - declined. Beijing Jeep has now expanded into building other vehicles and it remains at the core of DaimlerChrysler's operations in China, according to chief executive Dieter Zetsche. The SUV is a big hit in China with more than 200,000 sold last year, a rise of nearly 14 per cent. About 12 per cent of them came from Beijing Jeep.


DaimlerChrysler says its Chrysler brand cars, including the Beijing Jeep, sold 30,394 cars in China, in 2005, up 5 per cent from the previous year, although the group is still trailing BMW in terms of sales growth and volume of sales.


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