Jeep to Lure Chinese Drivers With Models Made in China

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The soon-to-be Fiat Chrysler Automobiles company announced on Saturday that it will begin producing three new Jeep models in China by the end of next year. China is the world’s second largest market for Jeep vehicles, behind the United States.

For now, Fiat SpA and Chrysler Group LLC said that they would build the cars through a joint venture between Fiat and Guangzhou Automobile Group. Jeeps had been built in China between 1983 and 2006 when the then-owner of Chrysler, Daimler AG, decided to stop production but continued assembling the vehicles at its Chinese plant.

Jeep sold just 60,000 vehicles in China last year out of a total of some 3 million SUVs sold in the country. Because Jeeps are imported into China they are subject to steep tariffs that can run the cost for a high-end Jeep to more than $200,000. The agreement with Guangzhou gives Fiat Chrysler a local partner and provides the cover it needs to avoid the tariff. Now there is only the highly competitive field to deal with.

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At the Beijing Auto Show this week, Ford Motor Co. (NYSE: F) announced a partnership with Jiangling Motors Co. to build a seven-passenger SUV. General Motors Co. (NYSE: GM) and Volkswagen AG are the two best-selling carmakers in China, and each has a new model aimed at the Chinese market. The Chevy Trax is a small (tiny) SUV that the company introduced at the New York Auto Show last week that GM plans to sell in the U.S. and China. Volkswagen is showing an Audi TT crossover hybrid SUV sedan in Beijing.

Mercedes-Benz has also introduced a luxury SUV concept to compete with the BMW X6. BMW is countering with a new model, the X4, introduced in New York.

SUVs everywhere, at all price points, and in just about every imaginable configuration. Fiat Chrysler may have waited a little too long to get back into the game.

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