FCA bets on market-specific models to get traction in China
A Jeep Compass at the Guangzhou auto show in Nov. 2016. Photo credit: BLOOMBERG
MILAN — Fiat Chrysler Automobiles will offer more vehicles tailored to China and speed up electrification to relaunch the group in the world’s largest car market.
Alfa Romeo will add two long-wheelbase vehicles to its lineup by 2022, while Jeep will add more Chinese-specific SUVs such as the Grand Commander, a seven-seater launched in April and developed in China off the Jeep Cherokee.
Jeep brand head Mike Manley said the Jeep range will include two China-specific vehicles by 2022. One additional nameplate will be locally produced, Manley said at a presentation of the 2018-22 FCA business plan on June 1.
In the first four months, sales of locally produced Jeeps totaled 48,432 units, down 30 percent from the same period of 2017.
CEO Sergio Marchionne said during the business plan presentation that FCA has made mistakes in its China strategy, especially with the Jeep brand. “Jeep is somehow perceived as an exotic brand in China,” he said, adding, “China is more difficult to solve for Jeep than Europe.”
Jeep is now going to be marketed in China more as an “urban brand” than the traditional rugged U.S. off-roader. “If we manage to do that, I think Jeep can become a legitimate top-tier brand in China,” Marchionne said.
FCA has a 50-50 joint venture in China with Guangzhou Automobile Group, which currently produces four Jeep models — Renegade, Compass, Cherokee and Grand Commander — in plants in Changsha and Guangzhou.
FCA’s China presence will remain based on three of its core brands: Jeep, Maserati and Alfa Romeo. Production of Fiat sedans by the joint venture with Guangzhou Automobile stopped last year, and FCA has no intention to revive it.
“To speak about significant volumes in (NAFTA countries or) Asia-Pacific for Fiat would be a waste of time” Marchionne said.
The Jeep Grand Commander is a new effort for Chinese market.
Jeep will remain the only brand to be locally produced for the length of the five-year plan, Marchionne said in Balocco. “We have no plans to produce Alfa Romeo or Maserati vehicles in China,” he said.
The decision was made some years ago to preserve the Italian character of the two brands, but it might be put to the test with the launch of two China-specific models.
FCA announced in Balocco that the 2018-22 product plan will include two long-wheelbase versions of Alfa Romeo Giulia sedan and Stelvio midsize SUV specifically tailored to the needs of the Chinese market. German premium carmakers all offer long-wheelbase sedans in China, but they are mostly produced in China, as are long-wheelbase Volvo sedans.
According to FCA forecasts shown in Balocco, Chinese car sales in 2022 will include 15 percent vehicles powered by high-voltage electrification (battery electric, hybrid and plug-in hybrid), plus 20 percent mild hybrids. That is why China will be, along with Europe, the area where FCA has to electrify faster.
Jeep’s China plan includes four plug-in hybrids and four battery electric vehicles.
FCA has said it will invest 9 billion euros in the electrification process worldwide but shied away from details on how much of this will be spent in China. CFO Richard Palmer said the Chinese 50-50 joint venture with Guangzhou Automobile Group “is basically self-funding” as regards investments in new products and technologies.
The Jeep worldwide range for 2018-22 will include 10 plug-in electric vehicles and four battery electric vehicles, Manley said.
The general approach to China was much more cautious in Balocco than on previous occasions. Marchionne and Palmer shied from announcing specific volume and profit targets for China, contrary to what some analysts had hoped for. Max Warburton of Bernstein, for example, had written that FCA would include in the plan “a dramatic increase in Chinese activity with a target of substantial profits.”