More markets for U.S.-made Jeeps

DETROIT -- Jeep's fast-growing global manufacturing footprint will not only end the brand's "Sophie's Choice" allocation challenges, but will increase sales opportunities for top-end Jeeps made exclusively in the U.S., says Fiat Chrysler CEO Sergio Marchionne.

With Jeep popularity exploding in recent years, Marchionne said FCA has been unable to meet global demand. Allocating Wranglers, Grand Cherokees, Compasses and Patriots has been tricky, the CEO said, "over the last three or four years especially."

"One of the things that we've always faced in the United States in the production of Jeeps is to make this unfortunate Sophie's Choice about whether we sell in the U.S. or sell overseas," Marchionne told analysts on FCA's quarterly conference call last week.

In 2015, FCA sold 1.2 million Jeeps worldwide, 70 percent in the U.S. The company's latest business plan calls for increasing Jeep sales to 2 million worldwide by 2018. That includes doubling sales in Europe, more than quadrupling volume in Asia-Pacific and Latin America, and increasing the total slightly in North America.

"Even if there were a contraction of the U.S. market, there is in our view unexplored potential in terms of [overseas] markets, especially where we have not established local production," Marchionne said.

That's because FCA expects first-time Jeep buyers around the world to aspire to the larger, pricier Jeeps that Americans have been snapping up.

"We'll be able to compensate for [a decline in North America] by continuing to fuel the international expansion of Jeep at the upper end of the spectrum," Marchionne said.

FCA has been growing Jeep dealer networks in Latin America, Europe, Africa and Asia, and has added production of some Jeep models in Italy, China, Brazil, Mexico and India. But it has limited Jeep output outside the U.S. to smaller vehicles such as the subcompact Renegade, while keeping high-profit Jeeps such as the Wrangler and Grand Cherokee in the U.S.

But that strategy is beginning to change. For example, in China, Jeep will build not only the Renegade, but the compact Compass and Patriot replacement and the midsize Cherokee. Those vehicles are produced for the local market and are proving successful. Marchionne said FCA is on pace to sell about 100,000 Cherokees in China in 2016. In the U.S., Jeep's largest global market, FCA sold 220,260 Cherokees in 2015.

Jeep's rise also has the brand exploring new vehicles -- for North America and international markets.

At the upper end, the brand is developing luxury SUVs to rival Range Rover that are expected to command prices of around $100,000. Jeep will revive its Wagoneer and Grand Wagoneer nameplates for those vehicles. Marchionne confirmed on the call that FCA plans to build the Wagoneer and Grand Wagoneer at its Warren Truck Assembly Plant in suburban Detroit.

Warren Truck will continue producing Ram 1500s until the next-generation Ram half-ton launches in early 2018 at the Sterling Heights Assembly Plant 10 miles north. The CEO said previously that the Wagoneer and Grand Wagoneer would be co-developed with the next-generation Grand Cherokee, and likely would appear in 2019.

Jeep is also experimenting with a vehicle that would be smaller than the Renegade and likely would share a platform with a future small Fiat. Such a vehicle likely would be targeted at international markets including India, Indonesia, Africa and parts of Europe.