Fiat revs up plans to build Jeep in China

As SUV sales roar despite gridlock and rising fuel costs, carmaker in talks to revive production of vehicle in world's biggest car market

PUBLISHED : Tuesday, 23 October, 2012, 12:00am
UPDATED : Tuesday, 23 October, 2012, 4:19am

Fiat, majority owner of the Chrysler Group, plans to start making Jeeps in China again and might eventually make all of its models in the country, according to the head of both carmakers' operations in the region.

Mike Manley, chief operating officer of Fiat and Chrysler in Asia, said Fiat was in "very detailed conversations" with its Chinese partner, Guangzhou Automobile Group, on making Jeeps in the world's biggest car market.

Chrysler has not built Jeeps in China since Fiat took control in 2009.

"The volume opportunity for us is very significant," said Manley, who is also president of the Jeep brand. "We're reviewing the opportunities within the existing capacity" as well as whether the company "should localise the entire Jeep portfolio or some of the Jeep portfolio", he said.

Jia Xinguang, chief analyst at China Auto Consultancy Group, said Fiat and Chrysler would consider moving some of Jeep's production to China because the SUV was popular in that market.

Jia said that although car sales had slowed on the mainland in recent years, demand for SUVs was still strong.

"Last year, total car sales in the country grew 2.45 per cent but the SUV segment grew 20.2 per cent," he said.

Jia said mainland consumers preferred SUVs because they were seen as trendy and cool. And, even though major cities were afflicted with traffic jams and fuel prices kept rising, "consumers don't care about these factors".

But Jia said he would be impossible for Chrysler to build all its Jeeps in China.

"The US is still a very important market for them," he said.

"Chrysler has no factory in China, so if they want to manufacture cars, they will have to use the Fiat factory located in Changsha, which doesn't have enough capacity."

Otherwise, Chrysler would need to build its own plant but that would take time and involve lots of procedural issues, Jia said.

Fiat's joint venture Guangzhou Automobile plant in Changsha, in central China, has an initial annual capacity of 140,000 cars, with the provision of expanding it to 500,000 vehicles per year.

Chrysler is relying on growth in China to counter the weakness in Europe's car market. It is targeting annual sales of 500,000 outside North America by 2014, more than triple its overseas deliveries in 2009.

International sales for Chrysler climbed 22 per cent to 153,154 in the first nine months of the year, according to the company.

The Jeep brand accounted for more than three out of every four of those deliveries, with sales surging 54 per cent to 117,189.