Jeep: Why This American Icon Could Soon Be Part Of A Chinese Company | KUOW News and Information

Jeep: Why This American Icon Could Soon Be Part Of A Chinese Company

Aug 24, 2017
Originally published on August 24, 2017 8:01 pm

Ever since its fabled role in World War II, Jeep has been an American icon. And now the famous U.S. brand may be sold to a Chinese company.

Jeep was primarily made for the United Sates military, starting in 1941. It was used to transport troops during World War II, and that's when the rugged-looking vehicle captured the imagination of people worldwide.

The name Jeep is shorthand for GP or Government or General Purpose. It was a simple, sturdy and flexible vehicle that allowed for easy fixing on the battleground. After the soldiers returned home, Jeep was ready for sale to the general public in 1945. Its arrival essentially introduced the SUV to the market.

The Chinese company Great Wall Motor this week expressed interest in acquiring the Jeep brand from Fiat Chrysler Automobiles.

Zeroing in on Jeep isn't surprising, given that it is the jewel in the company's crown and makes up a lot of Fiat Chrysler's sales. In fact, along with the Ram truck, it makes up 95 percent of the company's profits, according to Morgan Stanley.

Not only is Jeep a popular car worldwide but sales have been growing in China since the brand was reintroduced there. Jeep expects to sell 850,000 vehicles in China in 2018, up from 130,000 in 2013. IHS Markit predicts that SUV sales will represent 40 percent of the Chinese auto market in 2020 — quadruple their share in 2010.

The fact that Fiat Chrysler may be considering the sale of its crown jewel gives a sense of the dire straits at the company. Chrysler has long been the sick man of Detroit. The company has nailed some of the city's most important cultural, emotional and style moments, such as depicted in the company's Super Bowl ads.

But its leadership over the decades, from Lee Iacocca to its current CEO, has been erratic. In the past two years especially, Chief Executive Sergio Marchionne has been trying to court merger or buyout partners.

The SUV bandwagon

Jeep expanded its SUV line in the 1980s and '90s. The Jeep Grand Cherokee, introduced in 1993, is one of the few vehicles made inside the city of Detroit today. Jeep's plants in Detroit and outside Toledo, Ohio, are tremendously important to the economies of those cities. Jeep is probably the most Midwest-centered of the brands, when it comes to manufacturing. In addition to Detroit and Toledo, Jeeps are made in Kokomo, Ind.; Belvidere, Ill.; and Mexico.

Despite their popularity, Jeeps aren't necessarily great cars. They, along with other Fiat Chrysler brands, are consistently the lowest-scoring brands by Consumer Reports in terms of quality.

The reporter's take is that it is an SUV with no storage space. It has a small cabin, but because of its size, it's hard to park. It gets terrible gas mileage. Its convertible top takes 20 minutes to take down.

But Jeep helped define the SUV age we live in. Few things represent America abroad more than the Jeep. Humvees just weren't as fun.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

ARI SHAPIRO, HOST:

There are few brands more quintessentially American than Jeep. And now it seems possible that a foreign company could purchase Jeep from Fiat-Chrysler, its parent company. At the moment these are just rumors. Those rumors point to larger trends in the auto industry, though. Jeep traces its history to World War II and helped create the sport utility vehicle. NPR's Sonari Glinton is with us to talk Jeep, SUVs and China.

SONARI GLINTON, BYLINE: Hey, Ari.

SHAPIRO: Tell us about this Chinese company that wants to buy Jeep.

GLINTON: The company is Great Wall Motors. And like many Chinese companies, it has these grand global ambitions. China is the largest auto market, and it's continuing to grow. Tariffs there and taxes and the way things are set up mean that some Chinese companies have been protected from competition and protected from some of the markets. So they have grown. And they have these deep pockets. And they're looking to sort of acquire other companies. An example would be Geely, which owns Volvo.

SHAPIRO: Why specifically would Jeep be a target for acquisition?

GLINTON: Well, in one way, as, you know, me and my colleagues were arguing at the business desk - we were talking about the word iconic - Jeep...

SHAPIRO: Whether we overuse the word?

GLINTON: Yeah. We...

SHAPIRO: But Jeep is an icon, you're going to say (laughter).

GLINTON: Yes, Jeep is definitely an icon 'cause it represents America. You can - when you see a Jeep, you know, you see the American GI going over a hedge row or fording a river. It represents who we are. And it also represents the growth market in the auto industry. The Chinese have a love affair with the SUV just like we are. IHS market, which predicts these sort of things, looked back and said that in 2010, when the market in China was 10 percent SUVs, by 2020 it's going to be 40 percent SUVs. So all the growth is in this SUV segment, and they're really, really profitable. So if you're a car company, you want an SUV brand that's really strong.

SHAPIRO: That explains why a Chinese company would want to buy Jeep. Why would Fiat-Chrysler want to sell it?

GLINTON: Well, Chrysler has been considered the sick man of Detroit for a while. It's the company that received two government bailouts. It's switched owners many times. And it's had a hard time having a long-term strategy. It also has a quality problem. It ends up being, you know, sort of at the bottom of, say, Consumer Reports reliability studies. But those brands are valuable. I mean, you know, Jeep and Ram represent well over 90 percent of profits at Chrysler. So it's a profitable bauble that Fiat has probably wanted to get rid of for a while. And the CEO, Sergio Marchionne, has said just as much.

SHAPIRO: Do you think this is going to happen?

GLINTON: I can't see, Ari, this particular deal happening. But, you know, the Jeep brand is so valuable. And so are, actually, some of the other brands associated with Chrysler. They - Sergio Marchionne, the CEO of the company, has been shopping the idea of a sale around for a few years now. So you can see that he kind of wants to do it. I definitely see that there's someone, you know, looking at Jeep because in part it represents America. It is so - you know, I have this photo of Steve McQueen standing in a river holding back a Jeep. It is - it is a great brand, and people are going to want it.

But will this one happen? I don't see it. Also, there is some pressure not only here about selling to a Chinese brand. And that's hard to see when this brand is so important to jobs in places like Detroit. It's one of the few brands actually built inside the city of Detroit. Detroit, Toledo and Kokomo - and that region, Kokomo, Ind. - they really do depend on this brand. It is really valuable to sort of the industrial, you know, center of the country.

SHAPIRO: That's NPR's Sonari Glinton. Thanks a lot.

GLINTON: Thank you, Ari. Transcript provided by NPR, Copyright NPR.