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Chinese plant could skyrocket Jeep sales

by Patrick Rall on

The reason for making Jeeps in China could be to reduce the extremely high pricing of the American SUVs in the world’s largest market.

With the growing popularity of Jeep around the world, FCA has been trying to restarting Chinese production (and adding Chrysler and Fiat to the mix). This would both help meet demand more quickly, and cut the gigantic prices of local Jeeps.  The move is not unprecedented; AMC started up Beijing Jeep, but it was taken over by Mercedes during the DaimlerChrysler years.

China imposes massive import taxes to protect local manufacturing; it also has various consumer taxes. Largely because of that, the entire Jeep brand carries luxury-level pricing.

china

For those who are not familiar with the high price of the Jeep brand in China, here are a few examples.

  • The least expensive Jeep sold in China is the Compass, which starts at 221,900 Yuan — roughly US$35,600 at the current exchange rate.  That same Jeep Compass in the US costs just $18,995; cutting the Chinese price by 25% would save buyers $8,900.
  • If you step up to the larger Jeep Cherokee, the Chinese list price starts at 375,900 Yuan, or US$60,298 — but it costs only $22,995 in the US. With the top of the line Cherokee V6, the price jumps up to US$85,002.
  • Jeep has a special edition of the tried and true Wrangler for the Chinese market.  Buying the base 2015 Wrangler in China with the 2.8 diesel will set Chinese buyers back about $69,000 (429,900 Yuan), while the Wrangler Rubicon with the 3.6L Pentastar V6 and four wheel drive will run at least $86,600 before any options.
  • Finally, for the ultimate in Jeep luxury, the Grand Cherokee  starts at 579,900 Yuan, or just over $93,000 — for the entry level Grand Cherokee that costs just $30,000 in the US. Chinese buyers who want America luxury and performance can get a Grand Cherokee SRT8 — at the shocking price of 1.2 million Yuan (US$193,300).  The Grand Cherokee is one of the models less likely to be built in China.

FCA is, like all foreign automakers, required to work with a Chinese partner to build cars locally; this will help reduce the selling price of the Jeep models built in China by 25-30%, mostly by reducing import tariffs. It is unlikely that they will be exported outside of China, given the size of the market and the capacity of the joint venture.

The shift of Chinese-sold Jeeps to a Chinese manufacturing facility will remove a small amount of demand from the North American plants, but with the swift increase in Jeep sales across the entire model line, plants all over the home continent should have no problem keeping the workers busy.

Thanks to TripleT for the concept of this article.

Patrick Rall was raised a Mopar boy, spending years racing a Dodge Mirada while working his way through college. After spending a few years post-college in the tax accounting field, Patrick made the jump to the world of journalism and his work has been published in magazines and websites around the world.

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