Great Wall eyes Jeep in drive to go upscale

A man rides a tricycle past a Jeep Liberty vehicle on the production line at Chrysler's Toledo Assembly Complex in Toledo, Ohio. [Photo/Agencies]

Experts say takeover would realize dream of company's chairman to make it world's largest SUV maker

China's Great Wall Motor intends to buy Jeep from Fiat Chrysler Automobiles NV, which analysts believe could give the country's largest SUV maker a boost to go upscale.

Wang Fengying, general manager of Great Wall, said it is interested in Jeep and is contacting Fiat Chrysler to begin negotiations, Automotive News reported on Monday, citing an email from the executive.

"We are interested in purchasing the Jeep brand and we will pay close attention to it," Zhao Lijia, a public relations manager at Great Wall, confirmed with China Daily on Monday.

However, Fiat Chrysler said that it has not been approached by Great Wall Motors in connection with the Jeep brand or any other matter relating to the business.

Last week, Fiat Chrysler, which has long been seeking a partner to cut costs, but has been rejected by GM and Volkswagen, was reported to have declined an offer from an unnamed Chinese automaker as the price was too low.

Dongfeng, GAC Group and Geely have denied reports that they had expressed an interest in Jeep.

Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, said Jeep, the renowned off-road SUV maker, will benefit Great Wall in terms of products and sales.

"If successfully completed, the takeover will enrich Great Wall's portfolio and it will instantly realize the dream of Wei Jianjun, chairman of Great Wall, to make it the largest SUV maker worldwide."

Jeep sold 1.42 million SUVs last year, while Great Wall delivered 938,000 units. In February, Wei announced a goal to sell 2 million SUVs a year by 2020.

Focusing on going upmarket, Great Wall launched a brand called Wey late last year, which is positioned to compete with those from international brands such as Volkswagen and Toyota.

Patrick Yuan, an equity analyst at Jefferies Hong Kong, said the takeover of Jeep will help to improve the outlook for Great Wall's long-term development.

"The company seems not to be acquiring too much know-how compared with global OEMs who are introducing more SUVs to the China market.

"By acquiring FCA (Jeep), technical support is expected, while long-term sustainability is more visible."

Great Wall shares rose 2.87 percent to close at 13.25 yuan ($1.98) in the A-share market, while in Hong Kong they closed at $HK10.08 ($1.28), a 1.61 percent rise.

Fiat Chrysler has been producing Jeep SUVs in China with its partner GAC Group since 2015, including the Cherokee and Compass models.

The 50-50 joint venture, with total investment of 17 billion yuan, employs around 6,000 people. It sold 120,000 SUVs from January to July, a 63 percent surge year-on-year.

A representative of GAC Group declined to comment on the possible impact on its productions if Great Wall takes over Jeep.

John Zeng, managing director of LMC Automotive Shanghai, said it may take some time for the three to solve but will not be a big problem.

"It may take the model of Volvo. When Geely bought it from Ford, it was localized at a Ford partner in China. Production continued for some years at the previous facility and then the models were gradually shifted to Geely's plants."