Jeep still waiting to go back in China image

Although nearly a year has passed after Chrysler and Guangzhou Auto announced an agreement to make and sell Jeeps in China, the deal has not been completed yet.

Jeep CEO Mike Manley stood on stage with Guangzhou CEO Zeng Qinghong shortly after a framework agreement was signed last year in January at the Detroit Auto Show. At the moment though, Fiat and Guangzhou have not agreed on the location of the plant, according to analysts and various media reports.

In September, Chrysler and Fiat agreed to build a new plant in Guangzhou, according to China’s Xinhua News Agency. The new plant will be capable of producing 160,000 Jeep SUVs annually and represents an investment of about $774 million, according to the report. Yet, Jeep CEO Mike Manley recently said that it might take until next year before a final agreement is announced.

“The way we’re working with our Chinese partner Guangzhou is progressing well,” he said. “I’m pleased with the direction that we’re going. We will announce it as soon as we can. Not sure it will be this year,” Manley added.

In China, the final agreement is subject to government approval. Also, Namrita Chow, analyst for IHS Automotive, said Fiat and Chrysler are reluctant to build a new plant in Guangzhou for Jeep production. Jeep is on track to sell about 25,000 SUVs in China this year, Chow said, but there is little hope of significantly increasing sales until it manufactures in China. Fiat only has a small foothold in China, accounting for less than 1%.

Dave Sullivan, an automotive analyst with AutoPacific, said that although China is still a crowded, fractured market with more than 100 brands, Jeep still has an opportunity to establish itself.