In order to compete in the fast-growing SUV market in China, Jeep wants to produce a vehicle in the No. 1 global auto market by the end of 2014, Jeep's top executive said on Saturday at the Shanghai auto show.
The "obvious choice" for a Jeep product to be made in China is the Cherokee, which was recently introduced in Jeep's primary U.S. market and will be on sale in the fourth quarter in China, said Mike Manley, CEO of the Jeep brand of the Chrysler Group.
Manley said the Cherokee is the best choice to be made in China because that size SUV market is growing quickly and also that the model is fresh in its life cycle.
Manley said the Cherokee would easily be able to be made at the new plant owned by the 50/50 joint venture between Fiat SpA (FIA.MI) and Chrysler and Guangzhou Automobile Group Co in Changsha, capital of the Hunan province.
Manley in January at the Detroit auto show revealed that the company would work with GAC to produce a Jeep in China for the local market.
But first, the joint venture must be expanded to include Jeep in addition to Fiat and Chrysler as owners of the non-Chinese half of it.
John Burton, head of GAC-Fiat, said on Saturday he is "fully confident" that Chinese officials will approve the expansion of the joint venture to include Jeep.
Manley said there are no plans to produce a Jeep model exclusively for China market, which in 2009 overtook the United States as the largest auto market in the world.
China is Jeep's second-biggest market, behind the United States.
"We would like to localize the Jeep in China for the Chinese market, but it wouldn't be a specific vehicle just for China," Manley said on the sidelines of the auto show in Shanghai.
Jeeps made in China will not affect plans for production at the Toledo, Ohio plant where the Cherokee is made now, Chrysler officials have said.
Jeep commands luxury vehicle prices in China, where the engines it puts in its vehicles make them subject to a higher tax. But Jeep can overcome the hefty import duties placed on its models sold in China, which are now all imported from the United States.
With other automakers including Jeep's main competitors in its home North American market, General Motors Co (GM.N) and Ford Motor (F.N) having established local production in China, Jeep must start building there to be competitive, Manley said.
Last year, Jeep sales rose 107 percent to about 46,000, making the brand a niche player in the burgeoning Chinese market.
China's total light vehicle sales, which include passenger cars and commercial vehicles, was more than 19 million and is expected to grow to more than 30 million within 10 years, said analyst Yale Zhang of Automotive Foresight in Shanghai.
Others are more bullish. For instance, GM has said China sales will rise to 35 million by 2022.
The fastest-growing segment of the Chinese market is SUVs. Zhang said about 15 percent of the auto market is comprised by SUVs, a figure that will grow to about 20 percent to 25 percent by the end of 2015.
In the first quarter, SUV sales in China industrywide were up 10 percent.
Jeep's sales in the first quarter were up 25 percent.
Of the 46,000 Jeeps sold in China last year, about 33,000 of them were the compact SUVs Compass or Patriot.
Last year, Jeep global sales topped 700,000 and Manley has set a target to sell 800,000 in 2014.