DETROIT — A Chinese automaker is “deeply interested” in buying Jeep, an iconic American brand, from Fiat Chrysler Automobiles in a move that likely would face political opposition in the U.S. and create angst among workers.
The acknowledgment comes amid broader speculation that the brands once held by Chrysler as one of the Detroit Three automakers could end up with Chinese owners less than a decade after the company was bailed out by U.S. taxpayers.
It could also stir criticism over the U.S. economic relationship with China amid concerns about the balance of power in manufacturing and trade.
But Fiat Chrysler has been searching for a partner or buyer to enhance its chances of navigating a fiercely competitive global automotive industry in which major investments are required to meet fuel economy standards and develop self-driving vehicles.
A deal for Jeep would leave the future of several other Fiat Chrysler brands in limbo. While it would retain its popular, profitable Ram truck line, it would also have the far-less-lucrative Dodge and Chrysler lineups.
“We are not wholly surprised that Great Wall is targeting what is arguably the strongest brand in (Fiat Chrysler’s) portfolio with little interest for the ‘other stuff,'” Evercore ISI analyst Arndt Ellinghorst said Monday in a note to investors.
Sanford Bernstein auto analyst Robin Zhu said a deal for Jeep alone would be tough to execute in the current political environment and could make the rest of the company “unsellable.”
Still, a possible Jeep acquisition would be in line with Great Wall chairman Wang Jianjun’s goal, announced in February, of becoming the top specialty SUV producer by 2020.
Great Wall “has this intention,” the public relations director for Great Wall’s Haval SUV brand, Zhao Lijia, told the Associated Press when asked about Jeep. An employee of the press office for the company headquarters, who would give only his surname, Zhang, told the AP, “Yes, we are interested in Jeep.”
Great Wall did not respond to a USA TODAY request seeking comment.
Fiat Chrysler said no discussions have occurred with Great Wall and that it’s “fully committed” to carrying out a plan to deliver news products and profitability through 2018.
“Fiat Chrysler Automobiles confirmed that it has not been approached by Great Wall Motors in connection with the Jeep brand or any other matter relating to its business,” the company said in a statement.
Nevertheless, Fiat Chrysler CEO Sergio Marchionne said earlier this year that the Jeep brand could be spun off into a standalone company. Marchionne also has been signaling that he is interested in discussions with other automakers about a sale of the company, partial sale or partnership of some kind for more than two years.
His past pursuits have included a failed effort to pursue a tie-up with cross-town rival General Motors, which wasn’t interested.
The potential sale of Jeep to a Chinese automaker is sure to raise political questions and will present a challenge to President Trump’s “America First” mantra.
One potential way around such concerns would be for Great Wall, or any other Chinese automaker, to purchase a minority stake, said Michael Dunne, an automotive analyst who specializes in China.
Chinese companies have shown a willingness to buy some or all of a company, invest in that company and allow the existing management teams to continue managing the company, said Dunne, founder of Dunne Automotive, a consulting firm.
“I believe that all parties — Chinese and American — are acutely aware of the political atmosphere right now. I would watch for a nuanced or slightly gradual approach,” Dunne said.
Dunne also said the Chinese government is encouraging Chinese automakers to expand globally and to spend money on that expansion rather than on investments inside the country.
“The government is giving the signal…they are giving management a lot of leeway to decide how to manage their profits for future growth,” Dunne said. “(Chinese automakers) have ambition. They have money. And they are looking for the smartest way in.”
Jeep, the rugged SUV brand known for the vehicles that played a role in helping the U.S. Army to win World War II, is Fiat Chrysler’s most successful brand.
The brand has been growing rapidly in recent years, accounting for a large percentage of Fiat Chrysler’s sales and profit growth. Jeep’s sales have climbed from less than 500,000 vehicles globally in 2008 to more than 1.4 million last year.
Marchionne set a goal in 2014 for Jeep’s annual sales to exceed 2 million annually by 2018, and the brand is on track to meet that goal, Fiat Chrysler Chief Financial Officer Richard Palmer said Wednesday.
At 2 million units, Jeep would account for 75% of the company’s global profits before earnings, taxes, interest, depreciation or amortization, according to Morgan Stanley.
“Most investors we speak with do not know how significant Jeep is to” Fiat Chrysler, Morgan Stanley analyst Adam Jonas said in a July note to investors.
Snavely and Lawrence reported from Detroit, Bomey from McLean, Va.
Follow Detroit Free Press business reporter Brent Snavely on Twitter @BrentSnavely.
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