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Jeep to Begin China Production

April 23, 2014

Toyota Motor Corp.’s Lexus may have skipped China for production, but Jeep is following other automakers by also moving into the world’s biggest auto market for manufacturing.

Last weekend, Fiat and Chrysler announced that they will build three new Jeep models in China specifically for the domestic market. Manufacturing is slated to start in Guangzhou in late 2015.

The carmakers said that the new Jeep vehicles will be built through a joint venture between Fiat and its Chinese partner, Guangzhou Automobile Group Co., Ltd or better known as GAC Fiat. Both Fiat and Chrysler will expand joint venture with GAC Fiat to deliver the vehicles to the Chinese market.

GAC Fiat currently builds the Fiat Viaggio in China. It is also the maker of the localized versions of the following Fiat models: 500, Bravo and Freemont. There are currently no Jeep vehicles manufactured in the country.

According to GAC Group Chairman Zhang Fangyou, Jeep’s China production“will enhance the sustainable development of the joint venture, and will surely bring premium experiences of driving and services to the Chinese customers.”

In a statement, both companies implied the creation of a Jeep model designed specifically for China. The said model will be tailor-made for Chinese motorists. No other details about the particular model was given. However, Chrysler Group spokesman Gualberto Ranieri did confirm that Jeeps made in China will only be sold in China and nowhere else.

Moving production in China is an attempt of Fiat and Chrysler to expand the Jeep brand and boost its sales in the country. China is the largest Jeep market outside the United States. The brand sold almost 60,000 vehicles in the country in 2013. However, Jeep is behind its competitors in the Chinese market.

With China’s demand for autos expected to remain high despite the country’s slowing economic growth, Fiat and Chrysler consider the local production of Jeeps as a good move. The brand seeks to reach its sales target of one million units this year and China production is bound to help the brand increase its sales. Last year, Jeep sold 731,000 units worldwide.

With the significant growth of the sport-utility vehicle (SUV) market in China, Jeep has the perfect opportunity to reach—or maybe even exceed—its own expectations. According to figures from the China Association of Automobile Manufacturers, SUV sales in the country jumped 49 percent to three million in 2013.

The decision to start Jeep manufacturing in China seems long overdue. According to the Wall Street Journal, Jeep was one of the first foreign brands to sell vehicles in the country but it had encountered problems which prevented it from building units. Production of Jeeps in China started in 1983 but was stopped in 2006. Manufacturing was ceased when the Chrysler Group, which owns the brand, split from Daimler AG. Daimler maintained a Beijing plant that assembled Jeeps.

Jeep imports the Wrangler, Grand Cherokee and Compass models that it sells in China. These are priced three times higher than their selling prices in the United States. In order to sell the cars at lower prices for Chinese buyers, automakers must build their cars in China.

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