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Jeep Targets China Production in Land of $205,000 Cherokee

Chrysler Group LLC’s newly redesigned Jeep Cherokee is the “obvious choice” to become the first Jeep built in China in six years and could double the brand’s sales there, according to Mike Manley, head of the sport-utility line.

Jeep, which became the first western auto brand built in China in 1983, may resume Chinese production by the end of next year at a plant in Changsha, Manley said today in an interview at the Shanghai Auto Show. The Cherokee on display at this show will go on sale in the country at the end of this year as an imported vehicle, he said.

Chrysler, which is controlled by Fiat SpA, is eager to expand its Jeep brand in China, where it is already profitable and where sales more than doubled last year to 46,000 units. Jeep has remained so popular in China it spawned a clothing line sold at more than 200 retail stores. That outnumbers Jeep’s 160 auto dealers in China, which Manley said he plans to double in two years.

“Jeep is a premium brand here,” Manley said, noting the high-end Jeep Grand Cherokee SRT8 sells for $205,000 in China, three times more than it fetches in the U.S. The new Cherokee “could double our volume here.”

The Cherokee will sell in the mid-size SUV category in China, which had 1.2 million in industrywide sales last year and is forecast to grow by 10 percent annually, Manley said. The model, which received mixed reviews for its styling in the U.S., has been well received in Chinese consumer clinics, Manley said.

‘No Controversy’

“There was no controversy in China,” he said. “They thought it was great.”

SUVs and luxury cars are the fastest-growing categories in China, as newly affluent consumers seek to show off their wealth. Jeep is considered a luxury brand in China and is shopped against Audi and BMW, Manley said.

“SUVs are considered a status symbol of what you’ve achieved so far in your life,” Manley said.

China last year became Jeep’s second largest market, surpassing Canada and trailing only the U.S. The compact Jeep Compass was the brand’s top selling model in China in 2012, accounting for 33,000 of its 46,000 sales. Worldwide, Jeep sales will reach 800,000 next year, compared with 701,000 last year, Manley said.

Building Jeeps in China will allow the brand to avoid import duties, which drive up prices and lower sales, Manley said. Jeep hopes to receive Chinese government approval for domestic production by the middle of this year, he said. That would enable production to start by late 2014.

Once Jeep is selling the Cherokee and manufacturing in China, “for sure we will not be a niche player,” Manley said.

Chrysler is based in Auburn Hills, Michigan.

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