Just before the 2014 Beijing Motor Show, Jeep and GAC announced an agreement to produce Jeep vehicles in China for the Chinese market, and at the show introduced design concepts highlighting potential for Jeep Renegade, Cherokee and Wrangler.
IHS Automotive perspective | |
Significance | Fiat Group, Chrysler Group International, and GAC Group have reached an agreement to expand their JV partnership, which currently includes a plant in Changsa. The new facility will build three new Jeep SUVs. Additionally, Jeep displayed four design concept products at the Beijing show. Each has unique interior and exterior trim, built from the existing Renegade, Cherokee and Wrangler. The Renegade concept also introduces the B-SUV to the Chinese market for the first time. |
Implications | The new production will be at a new plant in Guangzhou, with production scheduled to begin in late 2015. Jeep has yet to confirm which vehicles will be produced at the new plant, but the Renegade, Cherokee and a new C-SUV are expected. Building in China steps aside an import tariff and is important for meeting long-term volume sales targets. |
Outlook | The Jeep brand has heritage and history inside and outside the country to appeal to Chinese customers, and SUVs are seeing significant growth in the country. IHS Automotive forecasts that this will lead to Jeep production in China reaching 170,000 units by 2021. Jeep sales in China have been increasing steadily, from 10,772 in 2010 to 56,147 units in 2013; with this production, we forecast Jeep sales to reach 181,000 units in 2020. |
In the days before the Beijing show, Fiat Group Automobiles, Chrysler Group International and Guangzhou Automobile Co announced they have reached an agreement to expand their joint-venture (JV) partnership, called GAC Fiat. Under the terms of the agreement, localised production will include three new Jeep sport utility vehicles (SUVs) for the Chinese market, including consideration of a Jeep model uniquely designed for China. Production is planned for a late 2015 start. GAC Fiat is establishing a manufacturing branch in Guangzhou to build the Jeep products.
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Jeep Renegade Zi You Xia Design Concept |
In the prepared announcement, Sergio Marchionne, CEO of both Fiat and Chrysler, said, "Today's announcement represents the next chapter in the proper utilization and expansion on a global scale of the Jeep brand. Equally important is our continued development in the Chinese market with an established and respected partner such as Guangzhou Automobile Group." GAC Group Chairman Zhang Fangyou said, "The world-noted SUV brand Jeep being introduced into GAC Fiat will bring the cooperation between GAC and Fiat-Chrysler to a new phase. It will enhance the sustainable development of the JV, and will surely bring premium experiences of driving and services to the Chinese customers."
Additionally, Jeep showed four Chinese-inspired design concepts at the Beijing Motor Show, drawing attention to their two newest products, the Cherokee and the Renegade, as well as the Wrangler. Currently, the Wrangler is the only one of the three available in the Chinese market.
The all-new B-SUV Renegade was introduced to the Chinese market here, so Jeep marked the occasion with a Zi You Xia Renegade design concept. Zi You Xia means rebel, and intends to highlight a more sophisticated aspect of the Renegade's personality. The B SUV takes an exterior and interior colour scheme inspired by the National Centre for the Performing Arts in Beijing. The exterior is a warm chocolate grey with contrasting dark anodised bronze on the wheels, grill, front fog lamp bezels, rear lower fascia, skidplate and others; the roof, grille surrounds and door mirror caps are dark charcoal. Inside, trim includes finishes in piano black and anodized copper. Seats are rich brown leather and door panels featured grey/black plaid fabric inserts.
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Jeep Cherokee Sageland Design Concept |
Jeep brought two combinations of the newly available Cherokee to the show; while the B SUV segment is growing faster than the C SUV segment, the C SUV segment is much larger and this product more significant to the brand's health. The Cherokee Sageland was inspired by the historical landmarks and natural sceneries of the Shangri-La Region while the Cherokee Urbane concept "couples the night life of a modern megacity with glamour and elegance;" its interior references Chinese calligraphy. The Sageland takes an ivory pearl exterior with bronze accents in the grill, front and rear fascias, roof rack door mirror caps and exhaust tips. Inside, there are neutral grey leather seats with red and water blue accent stitching, inspired by the traditional Chinese knot design. The Urbane concept takes a steel color exterior with hyper black accents. As described by the Jeep PR communications, the cabin of the Urbane "embraces the Chinese spirit, colors and patterns."
Finally, the Wrangler Sundancer design concept is intended to combine "the legendary capability of the Jeep Wrangler with a touch of sophistication—and a sense of fashion." As with the others, the concept is offers unique exterior paint colors and accents along with thematic interior color and material treatments. The Chocolate Brown exterior has gold accents and a bronze tone-on-tone ghosted pattern in the fenders. The interior sports semi-aniline leather in the seats, as well as the door panels and upper instrument panel being wrapped in premium leather. Wrangler Sundancer also gets a unique front and rear bumpers equipped with linear LED lighting.
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Jeep Wrangler Sundancer Design Concept |
Outlook and implications
IHS Automotive forecasts China's SUV segments to grow from 3.64 million units in 2013 to more than 6.20 million in 2018 and to 6.6 million in 2020. Jeep's established history in SUVs and credibility within the market should leave the brand well positioned. While the overall SUV market is forecast to see a compound annual growth rate (CAGR) of 8.87%, the B SUV segment is forecast to see the fastest growth, to 855,000 units in 2020, and 14.3% CAGR. The E SUV segment is forecast for the next fastest growth, but will be notably smaller, at 487,000 units in 2020. The C SUV segment is forecast for a 9.04% CAGR, but will be the largest SUV segment, with more than half of all SUVs in the segment, forecast to reach 3.42 million units in 2020.
Jeep has yet to confirm which vehicles will be produced at the new plant, but the Renegade, Cherokee and a new C-SUV are expected. It remains possible, however, that the Cherokee may instead be built in Changsa, while the new production will be at a new plant in Guangzhou, with production scheduled to begin in late 2015. The deal announced is the culmination of months of discussions, including Marchionne considering looking for a new partner (see China: 16 January 2013: Fiat, Chrysler, GAC sign agreement to produce Jeep models in China and China: 9 December 2013: Fiat, GAC agree on Jeep plant location – report). Prior reports also indicated that this deal would include a new energy sedan, but information on that model was not included in this announcement.
Local production is necessary to avoid import duties, currently 25%, and for long-term opportunities in the country. The Jeep brand has heritage and history inside and outside the country which is likely to appeal to Chinese customers, and SUVs are seeing significant growth in the country. The Jeep lineup in 2013 included the Compass, Grand Cherokee, Patriot and Wrangler – all imported. IHS Automotive forecasts that with the introduction of the three new, China-built SUVs, the Compass and Patriot will be dropped from this market. The Grand Cherokee will continue, though the Wrangler may be dropped from this market in 2017. We also forecast Jeep adding a new Grand Wagoneer in 2017, though the Grand Cherokee and Grand Wagoneer will continue to be imported. We forecast these lineup changes and additional production will lead to Jeep production in China reaching 170,000 units by 2021. Jeep sales in China have been increasing steadily, from 10,772 in 2010 to 56,147 units in 2013; with this production, we forecast Jeep sales to reach 181,000 units in 2020.
The design concepts have not been confirmed for production, but Jeep has introduced a design concept at Beijing and gone on to produce it. Jeep introduced the Wrangler Dragon concept at the 2012 Beijing motor show and it eventually became available in China, the US, Australia and Puerto Rico. It is possible for some or all of the elements or full design themes to be brought into production for China and elsewhere. Few of the elements of these design concepts would be difficult to incorporate into production. If interest is high enough, they may be. Particularly as the brand looks to expand its presence in the world's largest auto market, this provides an opportunity to both demonstrate interest in tailoring their product ranges to the Chinese market as well as to gather feedback and reaction to the ideas presented.