The Joplin Globe, Joplin, MO

April 27, 2012

Chrysler lags in China’s red-hot market

Detroit Free Press (MCT)

DETROIT — It could still be a while before Chrysler builds Jeeps or any other vehicle in China.

Fiat, which manages Chrysler, has a new Chinese partner, Guangzhou Automobile, and a plant in the Hunan province that will begin production in June of the Fiat Viaggio compact sedan for sale in the third quarter.

The Viaggio was designed for China with a lengthened backseat, said Olivier Francois, head of the Fiat brand.

“This is a Chinese-specific cocktail,” Francois said.

But on the Chrysler side of the company, Jeeps are imported. The Chrysler 300 and Grand Voyager minivan, scheduled to go on sale in China this year, also will be imported from Canada for the foreseeable future.

Chrysler was the first U.S. automaker to produce a vehicle in China. Through Beijing Jeep, a joint venture between American Motors — which Chrysler acquired in 1987 — and Beijing Auto Works, it began making a basic utility vehicle called the BJ212 and then the old Jeep Cherokee.

The factory was shuttered in 2006, a victim of Daimler’s failed stewardship of Chrysler. Getting back in the game will be a time-consuming process.

“We are having detailed discussions with Fiat’s partner (Guangzhou Automobile) and they are interested in Jeep,” said Mike Manley, head of international operations for Chrysler.

But Chrysler has not applied to the Chinese government for approval to build Jeeps in China. And even when application is made, “the process to get approvals can take some time,” Manley said.

“You can’t make a presence in China without local production,” said analyst Rebecca Lindland of IHS Automotive.

Adding Jeep production might require an expansion of the new Fiat plant, which sits on plenty of available land.

“The opportunity to build (Jeeps) in the new (Fiat-Guangzhou) plant is possible, but we would need to expand capacity,” Manley said.

Fiat sold fewer than 1,000 cars in China last year. When Jeep imports are added, the partners’ combined sales were only about 35,000.

But the automakers have high hopes for the world’s largest market.

“We needed the right strategic partner and the right car to re-enter the market and the right segment,” Francois said.

Analyst Joe Phillippi of AutoTrends Consulting in Andover, N.J., said Fiat does not have a partner on par with General Motors’ relationship with mega-conglomerate Shanghai Automotive Industry Corp. (SAIC).

“GM has the big gorilla on their team,” Phillippi said.

Is it too late for Chrysler and Fiat?

“If China is a market of 30 million by 2020, clearly they will have an opportunity to establish a presence,” Phillippi said.

Francois said the Viaggio is the right product to re-establish Fiat in China after a 6-year absence.

“It is a 12-million(-vehicle) market in China, and 50 percent are C (compact) sedans,” Francois said of the car that is essentially a Dodge Dart with a lengthened wheelbase and more chrome.

The re-entry of the Chrysler brand to China comes after three years.

The Chrysler 300 will be available by the end of May, and minivans will be imported for sale by the end of the year, said Saad Chehab, head of the Chrysler brand.

“It’s an import for us, so every car we sell” is icing on the cake, Chehab said of the vehicles that were imported to China until 2009.

Well-heeled Chinese consumers who have personal drivers like luxury vehicles with a larger backseat.

Manley said Chrysler engineers have discussed offering an extended version of the 300.

“It’s something I would very much like to do,” Manley said, “but we have not made the decision to — or not to — yet.”