Obama's pet auto company to outsource Jeep to China

Original Post: Business Week

Fiat Says Jeep Output May Return to China as Demand Rises

By Craig Trudell on October 22, 2012 Tweet Facebook LinkedIn Google Plus 5 Comments

Fiat SpA (F), majority owner of Chrysler Group LLC, plans to return Jeep output to China and may eventually make all of its models in that country, according to the head of both automakers’ operations in the region.

Fiat is in “very detailed conversations” with its Chinese partner, Guangzhou Automobile Group Co. (2238), about making Jeeps in the world’s largest auto market, said Mike Manley, chief operating officer of Fiat and Chrysler in Asia. Chrysler hasn’t built Jeeps there since before Fiat took control in 2009.

“The volume opportunity for us is very significant,” Manley, who is also president of the Jeep brand, said in an interview at Chrysler’s Auburn Hills, Michigan, headquarters. “We’re reviewing the opportunities within existing capacity” as well as “should we be localizing the entire Jeep portfolio or some of the Jeep portfolio.”

Chrysler, which entered an alliance with Turin, Italy-based Fiat as part of its U.S. government-backed bankruptcy, is relying on growth in China to counter weakness in Europe’s auto market. The automaker is targeting 500,000 annual sales outside North America by 2014, more than triple its overseas deliveries in 2009.

Chrysler currently builds all Jeep SUV models at plants in Michigan, Illinois and Ohio. Manley referred to adding Jeep production sites rather than shifting output from North America to China.

Asia’s Strength International sales for Chrysler climbed 22 percent to 153,154 this year through September, according to the company. The Jeep brand accounted for more than three of every four of those deliveries, with sales surging 54 percent to 117,189.

“We’ve grown much stronger in Asia to make up or compensate for some of the difficulties in Europe,” Manley said. Europe will be in “very difficult, tough times” through at least 2013, he said.

Boosted by strong demand for the Grand Cherokee and Compass sport-utility vehicles, Jeep sales in China have more than doubled to 33,463 this year through September. The brand topped total deliveries for all of 2011 by July of this year.

Chrysler’s 2014 international sales target is “certainly within reach,” Manley said. The European auto market is on track to plunge in 2012 by the most in 19 years, according to the European Automobile Manufacturers’ Association.

“Given what we see around the world, it is stretching for sure, but it’s not something we’ve given up on,” he said.

Fiat and Guangzhou’s plant in Changsha in central China has initial annual capacity of 140,000 cars and is capable of eventually assembling 500,000 vehicles per year. The automakers will add production of a new vehicle to the factory roughly every 12 months and began building the Fiat Viaggio compact there in June.