Competition In The Automobile Industry: Jeep And Fiat Chrysler

“Competition”, it is one of the most readily used words when it comes to the car industry. Car companies work relentlessly to compete against one another, to produce better products, to utilize the newest technology, and to grow their brand in other countries, while continuing to showcase their employment ratings. Unfortunately, the concept of loyalty and brand development in places outside of the United States can prove to be somewhat difficult for some manufacturers; specifically Fiat Chrysler. According to Hu Ping, a sales manager at a Jeep dealership in Zhenjiang in eastern China, “Jeep is in a downward spiral. Barring a quick turnaround, “it’s just a matter of time before my boss decides to quit selling Jeeps. Ultimately, if Mike Manley and Fiat Chrysler don’t work collectively to develop a sales plan, Jeep could lose any type of stakeholding position they have in the Asian market.

When Mike Manley took over as the CEO of Fiat Chrysler, he promised that the downward spiral of negative sales would end. “The U.S.- Italian car maker sold fewer than 85,000 vehicles in China in the first half of the year, one of the weakest performances by any international auto group. Sales of Jeep, the star of the Fiat Chrysler stable, were down 35% from a year earlier.” From just the numbers alone, we can see that the Jeep brand is going down in both value and popularity. Comparatively, the Volkswagen brand is the most widely requested vehicle in China, with 2.07 million units, while Jeep comes in at 0.08 million units. Moreover, as we take a look back in time, when Manley was still in charge of the Fiat Chrysler’s Asia-Pacific Arm, he guaranteed that the company would soon find explosive growth in Asia. Currently, this is not the case; while Jeep continues to struggle with sales and accommodating a market that demands localized models and frequent updates, companies like Ford and GM still continue to be more successful. As Jeep looks at its future in Asia, it seems that they will continue to struggle unless they can begin to meet the needs of their customers. “Jeep, the storied American sport-utility vehicle brand, was the first foreign automaker to set up a joint venture in China, back in 1983. But the project never thrived and was eventually closed in 2006.” Then, as they began the process to reopen manufacturing in 2016, Jeep realized that the market had been flooded with competitive brands and SUV styles, which made competing nearly impossible. As a whole, if Jeep wants to be successful, they’ll need to think outside the box. According to Jeff Cai, general manager of JD Power China, “Jeep needs to offer more localized models and more frequent updates.” Ultimately fixing Jeep and the Fiat Chrysler brand is going to take time. It can no longer project that it will manufacture $850,000 vehicles, but instead they must create a new game plan. The mission statement for Manley and Chrysler’s future revolves around the need to fix Jeep. “Fixing Jeep is critical, given the brand’s outsize importance in the China market.” As a whole, Fiat’s business plan would include investing “$52.7 billion in new vehicles over the next five years, a fifth of it in electric cars.” Furthermore, they have began to address other needs by “specifically designing the seven-seat Grand Commander SUV for China, which hit the market in May. Around 3,000 had been sold by the end of June.” Overall, if Manley and Fiat Chrysler want to make a significant change, they’ll need to account for their current weaknesses. “Mr. Manley said during last week’s analyst call that one localized model wouldn’t be enough to turn things around, and that Fiat Chrysler needs to beef up its dealer network and improve existing vehicles.”

How would they measure this?

If we take a look back in time and utilize the knowledge gained from past sales, Jeep may be able to predict the swing in the market. For example, “Chrysler accounted for 91% of Fiat Chrysler’s China sales last year, up from 42% in 2014, in part because the Fiat brand was dropped from the local lineup. Fiat’s once-popular small city cars fell out of favor as China’s tastes shifted to large SUVs. Other than Jeep models, the company now offers only premium Alfa Romeo and Maserati vehicles and low-volume Chrysler and Dodge imports.”

As a result, Jeep will have to change their original projections and slowly institute their newest plans if they want to attack the Chinese market. “The 850,000 Fiat Chrysler vehicles that Mr. Manley long ago forecasted would be sold in China this year included 350,000 non-Jeeps, such as Fiats. In fact, first-half non-Jeep sales totaled roughly 8,800.” Even though sales volume is low, Manley and Jeep have a plan in place to try to recoup the sales they’ve lost. The process is going to be long and slow, but they know that Jeep is in a position to grow, it’s just figuring out how to make the market in China explode. Only time will tell.