Chinese automaker Great Wall Motor Co. is interested in buying the Jeep brand and has reached out to Fiat
Chrysler Automobiles to see whether a deal can be negotiated.
move would slice Jeep from the rest of FCA's brands, leaving question
marks over the future of Fiat, Chrysler, Dodge and Ram. FCA already said
it would consider splitting Alfa Romeo and Maserati into their own
Great Wall President Wang Fengying, listed by Fortune as the seventh most powerful woman in Asia, wrote in an email to Automotive News that Great Wall intends to buy Jeep and is "connecting with FCA" to begin negotiations.
said on Monday in a statement that it had not been approached by Great
Wall in connection with the Jeep brand or any other matter relating to
It is not surprising Great Wall wants Jeep only.
Analysts say Jeep is unquestionably the most valuable part of FCA's
portfolio and theoretically worth more on its own than the automaker as a
Indeed, Jeep is the jewel in FCA's crown by virtue of its global
brand reputation and a mystique that goes back to its birth during World
War II. Jeep may be the only thing that keeps suitors interested in
FCA. It's what has motivated deals going back to 1987, when Chrysler
bought American Motors Corp., and General Motors has taken a look at a
tie-up between the companies at least three times in the past decade.
And in April this year, FCA CEO Sergio Marchionne told analysts it's possible the company could spin Jeep off on its own.
Hui, a spokesman for Great Wall, followed up on the note from Fengying
in an interview and said the automaker has indirectly expressed interest
in Jeep but has not yet made a formal offer or met with FCA's board.
are deeply interested in the Jeep brand and have paid close attention
to it for a long time," Hui said. "Our strategic goal is to become the
world's largest SUV maker. Acquiring Jeep, a global SUV brand, would
enable us to achieve our goal sooner and better" than Great Wall could
do with its own brands.
Great Wall set up an r&d facility in
Detroit this year and is using it in part to learn more about the U.S.
market, Hui said. It also has an r&d center in Los Angeles, and this
year it said it was reconsidering building a plant in Mexico because of
concerns over threats by President Donald Trump to renegotiate the
North American Free Trade Agreement. Building in the U.S., where Great
Wall hopes to sell its Haval brand SUVs eventually, would hedge against
trade concerns, the company said.
Although Great Wall generates
much less annual revenue than FCA ！ $14.76 billion vs. $131 billion ！
Hui said the company is confident it could raise funds to make an
"Great Wall has a strong track record in making
good profits," he said. "We are also listed in Hong Kong and Shanghai.
We can make use of our accumulated profits as well as our access to the
capital market to make the deal happen."
The idea that Jeep might be available as a standalone brand could set off a global bidding war.
is an argument that GM, which flatly rejected any suggestion of a
merger with FCA in 2015, could want to add Jeep if it became available
to replace the Hummer division that it gave up in 2010. Jeep could make a
solid addition to Volkswagen's lineup, especially since it would give
VW the bigger footprint it has been working toward in the U.S.
might even open the door for a bid from a company such as Mahindra in
India, an experienced maker of trucks and off-road vehicles that
struggled and failed to enter the U.S. with a compact pickup.
a Chinese automaker could be the right next owner for Jeep. If Great
Wall follows the same playbook Geely Auto used when investing in Swedish
carmaker Volvo, and Indian conglomerate Tata Group used when purchasing
Jaguar Land Rover, it could turn Jeep into one of the most powerful
brands in the world. Geely and Tata both invested money into their new
subsidiaries and gave management the freedom to reinvent the brands.
a result, Volvo is more Swedish than it has been in recent history,
launching sophisticatedly styled vehicles with technology that pushes
the brand forward. And Jaguar and Land Rover are both more British than
they were under Ford ownership, regaining their identities as
traditional high-luxury brands.
Jeep doesn't need to be
reinvented. Its brand is already strong, though it struggles with
quality ratings. But spinning it out on its own could prove to be a
massive, complex undertaking.
What's Jeep worth?
So how much is Jeep worth? The answer ！ thanks in no small part to
franchise laws in North America, the brand's biggest market ！ is that it
likely depends on who's doing the buying.
Jeep isn't a standalone
brand, and its network of more than 2,400 U.S. dealerships ！ each with a
franchise agreement protecting that dealer's right to sell Jeep-branded
vehicles ！ means the brand's overall value is tainted to any potential
purchaser with a franchise dealer network of its own that might think
about stripping Jeep away from Chrysler, Dodge and Ram.
Morgan Stanley analyst Adam Jonas attempted to pin a hard value on the
brand. He said Jeep, as it stands, is worth the equivalent of about
$17.20 per share, and that FCA, including Jeep, was worth about $16.40 a
share. At those estimates, Jonas put a value of $33.5 billion on Jeep
compared with a value of $32 billion for all of FCA.
credit, FCA has done more since it acquired Jeep in 2009 to exploit and
globalize the brand than all of its previous owners combined.
2008, Jeep sold about 500,000 vehicles worldwide, all of which were
built in, and the vast majority sold in, North America. By 2016, thanks
to an expanded product line and expanded global production into Latin
America, Asia and Europe, Jeep's global sales were 1.41 million trucks.
About a third of those sales were outside North America in places such
as Brazil, India and China where FCA was ramping up or just beginning
local production as it marched toward a goal of 2 million sales globally
Though its U.S. sales have fallen each month since September, its
global ramp-up continues. New factories and joint ventures in Brazil,
India and China are producing the Renegade, Cherokee and the redesigned
Compass for sale in new markets. In addition, the brand will expand its
offerings upward in 2019 with new Wagoneer and Grand Wagoneer
body-on-frame-based luxury SUVs.
On a call with analysts last
month, Marchionne argued that Jeep still hasn't begun to touch the top
of its true global potential.
Marchionne said the global SUV
market could grow to between 33 million and 35 million vehicles
annually, given current consumer trends.
"If there is one brand
out there that has the right to claim the ability to have one out of
five ！ 20 percent of that [global] market belong to it ！ it's Jeep,"
Marchionne told analysts.
If ！ and it's a big if ！ Marchionne's
targets are achievable, that would mean Jeep would eventually sell more
than 7 million vehicles globally, which could make a $33.5 billion price
tag seem like a bargain one day.
Michael Wayland contributed to this report.