Marchionne insists Jeep can hit 1 million sales in 2014

Marchionne: "It should add up to a million."

Photo credit: Bloomberg
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DETROIT (Reuters) -- Now that Italy's Fiat S.p.A. has almost closed its deal to buy the portion of Chrysler it does not already own, one of the main items on the to-do list of Chief Executive Officer Sergio Marchionne is expanding the global reach of the Jeep brand.

And Marchionne, the CEO of both Fiat and Chrysler, wasted little time this week in making a prediction that some analysts regard as bold: Jeep will achieve its goal this year of selling 1 million SUVs around the world.

That would represent a 37 percent rise from Jeep's global sales last year.

Marchionne said at the Detroit auto show this week that the lack of a mid-sized SUV in the U.S. market hurt overall sales last year, but strong demand for the Jeep Cherokee in 2014 will help Chrysler to boost sales by 37 percent.

Fiat is expected to close a deal next week that will give it full ownership of Chrysler.

Chrysler's Jeep Liberty was out of production last year and any remaining sales were minimal, so Chrysler Group's best-selling brand did not have a mid-size SUV, the largest entry in the American SUV market. Cherokee was only sold in the final two months of 2013 and Marchionne said all signs point to the company making up for lost sales this year.

"And we've got the small Jeep coming out of Europe," he said, pointing to some late-year sales for the unnamed compact SUV to debut at the Geneva auto show in March.

Also helping Chrysler hit its 2014 sales target, Marchionne said, will be increased production of Grand Cherokee, the top-selling Jeep in 2013, because some of the bottlenecks have been eliminated at the Jefferson North plant in Detroit.

Finally, there is some more output expected to be wrung out of the Wrangler plant in Toledo, Ohio, he said.

"So we'll see. It should add up to a million," Marchionne said.

Ambitious target

Not everyone is a believer that Jeep can jump that much from last year's global sales of 731,565, up 4 percent from 2012 and the second straight full-year record for the brand.

Jeff Schuster, senior vice president of forecasting at LMC Automotive, said Jeep will hit 1 million in sales by 2020, but not this year.

"All the planets would have to perfectly align, even those we don't yet know about, to hit the target in 2014, so we just don't see that happening," he said.

Mike Manley, head of the Jeep brand, agrees that Jeep has to avoid setbacks to reach a million in sales this year.

"I'm very focused on getting to the million number, but I want to get a few months under my belt before I say 'yes we're going to be there,'" he said in an interview at the auto show.

"I want to see a couple of months of Cherokee," he added. "We're just beginning to ship to international markets."

'Acting as foreigners'

Fiat's deal to acquire the remaining portion of Chrysler from the healthcare trust for retired Chrysler workers is expected to close next week. After the companies are merged, the main goals will be expanding Jeep globally and relaunching the sporty Alfa Romeo as a luxury brand, Marchionne told reporters at the show.

Marchionne has said for several years that Jeep and Alfa Romeo are Fiat and Chrysler's only possible global brands, but a lot of work remains to expand Jeep's reach, particularly in Asia.

"We are true novices," he said of Asia. "We have a very long way to go."

He said Fiat and Chrysler have performed particularly poorly in South Korea.

"We need to strengthen our resources" in Asia, he said. "We have been acting as foreigners in those markets for a long period of time. We need to correct it."

Built in China

While Manley pointed to increased sales of U.S.-made Cherokee in international markets and better distribution in America, Jeep still has a ways to go before it can move many vehicles in the world's biggest car market, China.

Chrysler intends to build a Jeep in China for that market, but Marchionne and Manley could not say how soon the Chinese government would give the go-ahead for those plans.

Manley said there are signs the approval could come at the end of the first quarter, which would mean that production could start by the end of 2015 or in the first half of 2016.

"You can never be totally confident until it comes," he said, referring to the Chinese government's approval for production.

Jeep is expected to add Cherokee production to the plant Fiat runs with partner Guangzhou Automotive Group. The Fiat Viaggio sedan built at the Changsha plant in south-central China sits, like the Cherokee, on the underbody architecture of the Alfa Romeo Giulietta.

Marchionne reiterated that the Wrangler and the Grand Cherokee will not be built outside the United States.

"That leaves the Cherokee by definition and the little Jeep," he said, referring to the subcompact SUV.

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