Italian auto maker Fiat Group SpA will look for a second partner in the Chinese mainland in a bid to develop Jeep, a brand under Chrysler Group LLC.
Zeng qinghong, general manager with GAC Group, signed a framework agreement with Mike Manley, COO of Fiat for the Asia-Pacific region and president of Jeep, during the Detroit auto expo in January this year and under terms of the agreement, GAC Fiat, a 50-50 joint venture between GAC and Fiat, will produce Jeep products and the products will be sold in the Chinese mainland only. However, Sergio Marchionne, CEO of Fiat and chairman and CEO of Chrysler, said recently that it had had a partner in the Chinese mainland and that was GAC. It might look for a second one there in a bid to develop Jeep and so far, many homegrown Chinese firms had showed intention to cooperate with it.
Fiat has controlled a 100 percent stake in Chrysler and is busy making preparations for a mass production for the latter. In line with Sergio Marchionne, strengthening competitiveness through mass production is the only way for an auto maker to succeed in the future and to produce Jeep products in the Chinese mainland will be an important part of its strategy globally.
Jeep mainly operates in the Chinese mainland through imported products currently and prior to this, it once established a joint venture with BAIC Motor. The venture was formally established in the 1980s, but introduced only two new auto models later. The departure between Daimler and Chrysler delivered a strong impact on it and the venture was renamed BAIC Benz later.
In line with industry observers, China continues tightening examinations and approvals on auto projects and it is not a bad way for Jeep to achieve a localized production in the market through the cooperation between Fiat and GAC. Fiat is consolidating itself and Chrysler and in many fields, especially auto part and component purchase, they share resources. And to some extent, this will help them reduce cost largely. Notably, GAC Fiat has had an ability to produce Jeep products.
However, there will be two negative influences. There will be two ways for Jeep to enter the system of GAC Fiat and one is that shareholders of GAC Fiat will become Fiat, GAC and Jeep from previously GAC and Fiat only. And under such an environment, GAC will become the biggest shareholder of it. And the other is that licensed by Jeep, GAC Fiat will produce Jeep products. However, it will become a tough job for Jeep to control quality, price and production capacity of the products.