SEMA News—May 2012
By Alysha Web
Global Jeep Appeal in Two Big Emerging Markets
Opportunity for U.S. Specialty-Equipment Manufacturers in China and Russia
Off roading is currently quite popular in China with many Jeep owners among the avid enthusiasts. Photo Courtesy of To Jeep Racing
“Chinese consumers practically worship prestigious brand names, and Jeep still carries a certain swagger in the People’s Republic of China,” wrote Mike Dunne, president of the Dunne & Co. consultancy, in Automotive News.
Chrysler currently sells the Jeep Grand Cherokee, Wrangler, Compass and Patriot models in China. All are imported, which boosts the price considerably because of an import tax. The Compass was the best-selling model in 2011.
In 2012, Chrysler plans to add the Grand Cherokee Spring Special, Wrangler Arctic and a Wrangler special to China. Designed in the U.S., the special will be unveiled at the Beijing Auto Show in April.
“We have a robust plan to keep expanding Jeep’s portfolio in China,” said a spokesperson for Jeep in China.
That portfolio will likely soon include locally produced models. Chrysler owner Fiat SpA formed a joint venture with Guangzhou Automobile Group Co. in 2009. The joint venture is currently building a plant in Changsha, located in central China’s Hunan province. The plant, which should be operational in a few months, will have a capacity of 500,000 units, according to Chrysler sources.
Local production of the Compass small SUV and Grand Cherokee is being discussed, according to Chrysler sources, but no decisions have been reached. One problem, the sources said, is that Fiat also wants to produce Fiat models in the Changsha plant. And another problem is that China’s central government recently made it more difficult for new foreign automakers to get permission to produce in China. Mike Manley, CEO of the Jeep brand, has said that Jeep may start local production in China in 2013 or 2014.
Chrysler aggressively markets the Jeep brand in China. The campaign includes hosting an “Ultimate Journey” road trip to Burma in 2011 and “Camp Jeep” events in rugged areas of China. Jeep dealers in China also organized the on- and off-line Jeep Experience Center, where Jeep fans can meet and organize events. Hundreds of Jeep owners participate annually in those events, Chrysler said.
The Jeep brand probably has the highest customization rate among SUVs in China, according to Yale Zhang, a Grand Cherokee owner and president of the Shanghai-based consultancy Automotive Foresight. Popular customization includes lighting, bumpers, roof racks and radios, said Zhang, who noted that typical Jeep owners in China are male and dream of off-road adventures more than purchasers of other brands of SUVs.
Currently, Chrysler sells the Jeep Grand Cherokee, Wrangler, Compass, and Patriot models in China, and plans to add the Grand Cherokee Spring Special, Wrangler Arctic, and a Wrangler special to the lineup later this year. While all of these models are imported, Mike Manley, CEO of the Jeep brand, has said Jeep may start local production in China in 2013 or 2014. Photo Courtesy of To Jeep Racing
“Jeep is one of the image brands in Russia,” she said. “Jeep stands for safe vehicles that are appropriate for Russian roads and have an attractive design.”
The Grand Cherokee, Cherokee, Wrangler and Compass are currently sold in Russia. All are imports.
In late February of this year, Fiat signed a letter of intent with Russia’s Sberbank to provide financing for and take a minority equity stake in a joint venture to produce Jeeps in Russia. Initial capacity will be 120,000 units, according to a Fiat press release. There was no news on what models will be produced.
Binding agreements will be finalized in the first half of 2012, said Fiat. That won’t be a moment too soon. According to Hristova, competition in the SUV segment is heating up in Russia.
A typical Russian Jeep owner is a successful male businessman between the ages of 30 and 50, said Hristova. But he is probably not dreaming of off-road adventures so much as of finding a parking spot in Moscow. “I have a Jeep; I park where I want,” is a typical joke among Jeep drivers, she said. The Jeep brand is also popular among Russia’s wealthy “gilded youth” because of its solid look, she added.
Jeep owners in Russia tend to buy the most premium accessory package, according to Hristova. A journalist at Maxi Tuning Russia told SEMA that wheels are often customized, and Hristova said that four-wheel drive is especially important for Jeep in Russia.
“Without it, only the image will be the key selling point,” she said.