Jeep in China wasn't meant to be

The long, strange saga of Jeep in China — has come to its ... well, not its end, exactly ... but something close to it.

Michael Dunne, the esteemed expert on the Chinese auto industry, likened it to a Greek tragedy — or comedy.

It strikes me more as a heartbreak story: a pairing that once seemed destined and yet was never meant to be.

The brand that was a pioneer into China — yet missed out on the market's exponential growth.

For a decade as an American exile brand — imported in small numbers — Jeep was coveted and Grand Cherokees commanded exorbitant prices.

Mike Manley, running Fiat Chrysler's most valuable brand, slogged through many long trips to Guangzhou to reach a deal with GAC. But in year two after FCA's merger with PSA Group, Stellantis CEO Carlos Tavares is moving on.

Jeep, the brightest star in Stellantis' constellation of brands, is returning to import-only status in the world's biggest auto market.

It's a humbling setback for the brand and the company. How did things go wrong?

In a sense, it all goes back to the beginning — and just kept going wrong from there.

"You had high drama, you had mistrust, bad luck, misdealings — the works," Dunne said of the epic tale of Jeep's Chinese frustration.

Jeep was the first U.S. brand to really make a play for China — in 1984 when the original SUV brand was still owned by American Motors.

China was still a pretty poor country then, and not much of an auto market. So the Beijing Jeeps were low-tech, extremely trucky vehicles.

Those early "Jeeps were designed for farmers and construction workers — they're trucks," Dunne recalled. "Nobody in the city who had an education and were the elites wanted a Jeep or anything like a Jeep."

I can remember seeing a fleet of the old Jeeps at a driving school near Shanghai in 2004. Compared with the models on your local lot, the driving experience looked like a cross between a tractor and a garbage truck.

With something that big and heavy, it's hard for a student driver to get hurt.

Then Jeep was gone. It wasn't so much a strategy as it was being on the wrong side of a power play.

Chrysler gained control of Jeep by buying American Motors. Then Daimler got control of it through the misnamed "merger of equals" in 1998.

So in 2003, wanting to make Mercedes-Benz and its three-pointed star more prominent in a fast-growing-but-still-small market, DaimlerChrysler decided to swap Beijing's partner: Beijing Jeep was over and Beijing Benz was born.

"Mercedes more or less ... stole the license away from Jeep, closed down Beijing Jeep ... at just a time when SUVs suddenly become very popular in China."

The Chinese market went on a tear, growing rapidly from about a million vehicles a year to 10 million and beyond. The Chinese market has been so big for so long, it's hard to remember that just 20 years ago, it was an afterthought or a pipe dream for most automakers.

While it was on the outside looking in, it looked very attractive to affluent Chinese. More young people went to college in the U.S. and came home with the understanding that Jeeps are undeniably cool. Reports of transactions well into the six figures fueled confidence that demand was strong.

But by the time Manley formed the brand's new joint venture, the market was pretty well saturated. European luxury brands had the technology and cachet to command top dollar. Global giants such as General Motors, Volkswagen and Toyota had established substantial followings, and fast-improving Chinese brands had a foothold at the low end of the market.

Rather than starting high and working down, Jeep tried to come in with an affordable model: the Compass.

It did well for a while, Dunne said, but lacked the pizzazz to carry the brand forward, and demand fizzled.

Fast-forward to this month, and the logic seems sound: If you can't make money producing Jeeps in the world's biggest crossover and SUV market, maybe you should just stop.

Certainly, business isn't going well: Dunne said only one Jeep was sold in all of China in June. (Though as recently as last year, Stellantis' annual report indicates, the GAC-FCA venture was making money: €317 million worth of equity income.)

Tavares, seeing other Western companies gain control of their JVs, wanted the same. When GAC wouldn't give it, he walked away.

That toughness and determination to do the logical thing — rather than be blinded by the potential of such a large market — is central to Tavares' leadership style.

Maybe this is how it was meant to be.

"The Chinese have an expression called yuanfen," Dunne said. "Basically the translation would be 'destiny.' And when I talk to my Chinese friends about Jeep, they kind of shrug their shoulders and say, 'Yep, Jeep's a victim of that old yuanfen."