With strong name recognition and now a respected Chinese partner, Jeep is ready to get back in the thick of the world’s largest auto market.
Fiat and Chrysler Group announced a deal with Guangzhou Automobile Group that is expected to lead to resumption of Jeep production in China for the first time since 2006.
The Chinese government must approve the deal before the partners can build a compact Jeep SUV by the end of 2014, and several more models in the next five to 10 years.
“From my perspective, we need to get to production as soon as possible,” said Jeep CEO Mike Manley.
In 1983, Jeep became the first U.S. automaker to sell vehicles in China. But Chrysler’s former owner Daimler pulled out of the country in 2006.
China has become the largest automotive market in the world and any automaker with ambitions of being a global player must have a manufacturing presence there.
In 2012, 19.3 million cars and trucks were purchased in China, or nearly 5 million more than in the U.S. Jeep sold 73,697 SUV’s in Asia last year – a 94 percent increase over 2011, but it is only a minor player.
“We have very strong brand recognition in China,” Manley said. “We are well-known and well-liked, and therefore the opportunity is pretty significant.”
Chinese regulations require that Western automakers that wish to produce vehicles in China do so with a joint venture partner. Guangzhou, which has joint ventures with Toyota, Honda and Fiat, is among several state-run automakers.
Automakers generally prefer to make vehicles in the regions where they sell them to keep production costs down.
The agreement with Guangzhou was signed Tuesday at Chrysler’s headquarters in Auburn Hills, Mich., by Zeng Qinghong, general manager and CEO of GAC Group, and Manley. The news was announced at Guangzhou’s news conference at the 2013 North American International Auto Show.
“We already have a joint venture with Fiat in China. … Now we are going to make Jeeps in China and sell in China,” Zeng said.
Fiat began building the Fiat Viaggio in China last September. The Viaggio is built on the same platform as the Dodge Dart. That platform also will be the basis for the replacement of the Jeep Liberty, which Manley will unveil at the New York Auto Show in March.
Chrysler’s announcement immediately generated criticism from Donald Trump and other conservatives. Republican presidential candidate Mitt Romney ran ads during his campaign that suggested Fiat and Chrysler would move Jeep production to China.
“I told you so,” Trump said Tuesday in an online post.
Manley said Chrysler and Jeep are not moving any U.S. jobs or production to China. Instead, by next fall, Jeep will have added 4,000 jobs at its U.S. factories in a period of 18 months.
That includes 1,800 workers in Belvidere, Ill. to assemble the Dodge Dart, Jeep Compass and Jeep Patriot; 1,100 workers in Detroit to make the Jeep Grand Cherokee; and 1,105 in Toledo, Ohio, by fall to build the replacement for the Jeep Liberty.
“We have been very clear on this point that we will not be moving jobs from the U.S. to China,” Manley said. “Without local production, the volume we will get is not available to us.”
Manley and Guangzhou’s CEO said Jeep is building vehicles to sell to Chinese customers, unlike electronics manufacturers and others who build products in China for export to the U.S.
“I am not entirely sure what is causing the confusion on this point,” Manley said.