Contrary to reports from the failed Presidential campaign of former Governor Mitt Romney (R-MA), Jeep will not be moving any domestic production of theirs overseas to China. In fact, they will be building Jeeps in China, specifically for Chinese buyers.
This news comes off of the heels of a report from The Car Connection, where Chrysler, Fiat, and China’s Guangzhou Automobile Group have all signed an agreement to produce Jeeps in China under their joint venture, GAC Fiat Automobiles. Just in case you were wondering, the Guangzhou Automobile Group is Fiat/Chrysler’s Chinese partner, per Chinese law that mandates that foreign automakers must partner up with a local company in order to sell and/or produce vehicles there.
Moreover, Reuters has quoted the ever entertaining Fiat chairman Sergio Marchionne as saying that the total output could ramp up to 100,000 units by 2014, and depending on how well the market continues to react to the rugged SUVs, that number could reach 200,000 units.
In any event, Fiat will have to focus on China, due to slumping sales of Fiats in their home country of Italy, as well as all of Europe. What’s promising for the Italian automaker is that sales of Jeeps have doubled from the previous year. If Jeep is successful, then Fiat could begin to introduce Chrysler over there as well. From my professional perspective, I can see the 200 and 300 models in an extended-wheelbase version doing very well, as evidenced by what General Motors has done with Buick. At the very least, it should do better than what Chrysler has done thus far in Europe (now resorting to rebadging Chryslers as Lancia…how the mighty have fallen).
Speaking of the Italian market, it has also been reported that Fiat/Chrysler will build at least one Jeep model in Melfi, Italy. The reported model will be the Jeep version of the upcoming Fiat 500L that will be built alongside the cute-ute, with sales planned for both Europe and the United States. This new Jeep is slated to replace the outgoing Jeep Patriot and Compass, both of which were a part of Jeep’s expansion in their product lineup, as well as to raise their overall CAFE numbers.
Contrary to other reports, I don’t look for Jeep to move any domestic production overseas, as the current trend of outsourcing is being to go by the wayside. With increased labour and shipping costs, as well as advancements in Six Sigma/Lean manufacturing, most companies are being to realise that producing products Stateside for our market is in fact more profitable, than the way things are currently done now.
Besides, Chinese buyers want vehicles produced in China. Imagine that.
Photo Credit: Jeep