Who will build the new Jeeps?
Brand aims to double global sales, add nameplates by 2018
DETROIT -- When the Allied armies won World War II overseas, they did so in a Jeep. Nearly 75 years later, Fiat Chrysler Automobiles has a similar strategy.
By 2018, the company plans to ride Jeep to distant shores and use the profits to help fund the revival of its other brands.
The vision for Jeep is audacious and ambitious. The company plans to:
More than double the brand's 2013 global sales to about 1.9 million units in 2018.
Build and sell vehicles in China, India and Brazil.
Sell a new luxury SUV, the Grand Wagoneer, to "compete with the Range Rovers of the world."
But Fiat Chrysler -- the successor to Willys-Overland of World War II fame -- may run into the same problem that Jeep's original owner did: insufficient North American capacity to meet demand. And this time, there is zero chance that Ford Motor Co. will step in to assemble Jeeps, as it did in World War II.
Two of the four assembly lines that make Jeeps today -- Chrysler's Jefferson North Assembly plant in Detroit that makes the Grand Cherokee, and the Wrangler half of its Toledo Assembly complex in Ohio -- already operate above their intended capacity.
The other two lines, assembling the Compass and Patriot in Belvidere, Ill., and the Cherokee in Toledo, have room for growth.
The automaker's plan calls for an additional 200,000 Jeeps to be built annually in North America by 2018, but it does not identify where or how. CEO Sergio Marchionne has repeatedly said he would not build Wranglers or Grand Cherokees outside the United States, despite his overseas growth plans.
Marchionne told skeptical journalists last week that the company has "the capacity to build everything I've showed you, so there's no additional plants" needed.
Others were less sure that Jeep can reach 1.9 million global sales in 2018.
"One common theme to the global growth is that Jeep sales are expected to see significant, sometimes heroic, gains across the globe" from 2014 to 2018, wrote analysts from IHS Automotive after the Tuesday, May 6, presentation. "Most recent sales forecasts saw Jeep reaching only 1.0 million units in this same time frame."
In 2013, Jeep set its second consecutive global sales record with 731,565 units. The achievement led brand head Mike Manley and Marchionne to boost Jeep's 2014 global sales goal to 1 million vehicles from 800,000.
Jeep boss Mike Manley: Assembling units in foreign markets will cut costs.
Through 2018, the executives forecast that about a third of the additional volume will come from industry growth, taking share from competitors, and more nameplates. Jeep is adding the subcompact Renegade this year and the 2019 Grand Wagoneer, a luxury SUV with three rows of seats.
The Renegade is being built initially in Europe and is packaged to appeal primarily to consumers outside the United States.
The rest of Jeep's growth -- and the global profits that will be used, in part, to fund a massive expansion of Alfa Romeo -- will come from assembling Jeeps in Brazil, China, India and Italy.
Building Jeeps in these locations reduces tariffs and the costs of manufacturing and transportation, Manley said.
By 2018, Jeep plans to build 500,000 SUVs in China and India for local markets with global partners such as China's Guangzhou Automobile Group Co. It plans to produce 200,000 Jeeps annually in Brazil for Latin America in its new $1.8 billion Pernambuco plant in Brazil, starting with the Renegade and eventually including two other models.
Another 200,000 Jeeps will be built annually in Europe, where the Renegade will go into production this year in Italy.
"We will provide vehicles that support a lifestyle of boundless freedom and adventure," Manley said. "The job we have is encouraging customers and potential customers to start the journey."
You can reach Larry P. Vellequette at firstname.lastname@example.org.