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Sergio's Challenge: Build Jeep Into FCA's Top Global Brand By 2018

October 15, 2014
3 min to read


Auto analysts are skeptical that Sergio Marchionne, the hyperbolic chief executive of Fiat Chrysler Automobiles, can meet his most ambitious goal: to nearly double Jeep's global sales over the next four years, reported Reuters.


Marchionne reiterated his aggressive target for boosting Jeep's annual volume to 1.9 million, while pacing the floor of the New York Stock Exchange on Monday during the newly merged company's first day of trading.

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That's nearly 700,000 vehicles more than the average of analysts surveyed Tuesday by Reuters, who believe FCA is more likely to boost Jeep volume to just over 1.2 million by 2018, from a projected 1 million this year.


"I have all the best intentions" of hitting the 1.9 million mark, Marchionne said in an interview Monday with Bloomberg TV. "We may even blow through it."


Counters longtime auto analyst and consultant Maryann Keller: "Realistically, he's not going to make the numbers."


Even if Jeep realizes only the more modest growth projected by analysts, it still is likely to emerge as the company's largest brand, accounting for 25 percent or more of total volume. Marchionne is expecting FCA sales to reach 7 million by 2018; analysts are expecting 5.1 million.


The success of FCA's Jeep growth strategy hinges not on a huge expansion of the brand's product portfolio, but rather on an expansion of its manufacturing and sales presence outside North America, Jeep's traditional stronghold since its post-World War II metamorphosis from military to civilian use.

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FCA currently builds five Jeep models in four U.S. plants and is just adding a sixth model, the Jeep Renegade subcompact, in Italy. The Renegade is slated to go on sale in North America early next year.


Four years from now, the plan is to build six models in six countries. That includes two plants in China that are scheduled to open in 2015 and 2016, with a combined annual production capacity of 500,000, or roughly one-quarter of Jeep's projected global volume.


Future Jeep models include only one other addition to the portfolio: A luxurious seven-passenger flagship in late 2018 that will revive the Grand Wagoneer name.


The Compass and Patriot compacts will be replaced by a single model in 2016, with redesigns of the Grand Cherokee and the Wrangler slated for 2017 and 2018, respectively.


Barclays Capital expects Jeep sales to reach 1.4 million by 2018. Whether Marchionne can hit the higher target depends "less on flooding the U.S. market with more Jeeps and more with taking an iconic brand global," Barclays analyst Brian Johnson said in an interview on Tuesday.

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While FCA expects to increase Jeep sales in Europe and Latin America, the real prize remains China, where the company continues to lag behind most of the major multinational automakers. Marchionne wants to leverage projected double-digit growth in SUV demand among Chinese consumers.


The brand's re-entry into China "will provide Fiat with a turbo boost" to growth in that market, said Richard Hilgert, an analyst at research firm Morningstar.


Marchionne agrees that "our big future" is in China.


But FCA and Jeep "aren't the only ones trying to grow" outside North America, said Jeff Schuster, senior vice president of forecasting at LMC Automotive, which expects global Jeep volume to reach 1.2 million in 2018.


Considering the swarm of new competitors coming, especially in the compact SUV segment, Schuster described Marchionne's target for Jeep as "unrealistic" and "a very, very difficult road."

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