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 Fiat Chrysler Automobiles' <FIA.MI> new small Jeep should help the
carmaker reach an ambitious sales target of 1 million vehicles for
the brand this year and will test the world's seventh-largest auto
group's ability to compete globally.
Through the alliance, brands like Jeep hope to gain a global
manufacturing footprint in Fiat's home turf in Europe and in
fast-growing markets such as Brazil, which has long been one of
Fiat's strongholds.
"The investment that Fiat has already made, now gives the
opportunity to Jeep to expand its manufacturing footprint at
lightning speed," Mike Manley, head of the Jeep brand, said at the
launch of the Renegade.
Even though analysts believe Jeep is the only truly global brand in
FCA's portfolio, they are cautious about the 1 million target, a 37
percent jump from 2013.
"Even though sales in Europe will grow, it won't be easy to make
huge volumes with Jeeps in the region because the market is very
different from the U.S. one," said Andrea Giuricin, head of TRA
Consulting. "Asia is still a big blind spot for Fiat, and they need
to rapidly grow their market share there to be able to maximize on
the potential of the Jeep brand."
The brand traces its roots to the iconic World War Two military
vehicle and has had multiple owners over the past seven decades.
While the Wrangler and Grand Cherokee models are the best-selling
Jeeps, it is through models like the Renegade that FCA hopes to
expand the brand outside North America.
Manley said the small, entry-level Jeep is not only fuel efficient,
but its compact size is better matched to narrower European roads
than some other models in the brand's family.
"This Jeep will enter a segment that's estimated to grow to more
than 2 million vehicles on a global basis by the end of 2015 and in
Europe alone, sales of small SUVs will reach nearly 700,000 within a
year," he said.
WRANGLER DNA
The Jeep Renegade will be produced at the Melfi plant in southern
Italy, making it the first Jeep built exclusively outside the United
States. Sales in Europe are expected to start in the third quarter
of this year and in the United States later in the year.
The small SUV retains many classic Jeep characteristics, with
squared-off nose, boxy design and round headlights reflecting its
Wrangler-derived DNA.
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The Renegade will also be built in Brazil as of 2015, FCA Chief
Executive Sergio Marchionne said. The carmaker plans to start making
Jeeps in China the following year, hoping to tap fast-growing demand
for sport utility vehicles in both markets.
The China plan, which is expected to add a Jeep to the plant Fiat
runs with partner Guangzhou Automobile Group <601238.SS>, is still
conditional on government approvals.
At the Melfi plant, the Renegade will share underpinnings with the
Fiat 500X, a crossover version of its popular 500 model that is
expected to be unveiled later this year.
Both the Jeep and the Fiat 500X are part of FCA's plan to turn
around its ailing European operations by 2016, using idled Italian
plants and creating jobs for thousands of workers who have been kept
on temporary layoff arrangements for years.
FCA is investing 1 billion euros ($1.37 billion) to produce the new
Jeep and a new 500 in Melfi. Investments and models planned for its
other plants in Italy, including a relaunch of the sporty Alfa Romeo
brand, will be presented in early May.
Unions at Melfi are hopeful brands like Jeep will create jobs and
boost an economy struggling to recover from its longest postwar
recession. But they are also worried what will happen if demand for
the cars does not pick up as expected.
"There is no certainty over what share of the SUV market in Europe
and elsewhere Fiat will be able to take, nor that they will manage
to reinstate all the furloughed workers," said Emanuele de Nicola,
the FIOM union's general secretary for the southern Basilicata
region. "There are still too many questions."
($1 = 0.7277 euros)
(Reporting by Agnieszka Flak; editing by
Dan Grebler)
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