Fiat Chrysler backs Jeep to scale unprecedented heights

While car makers around the world covet Jeep for its strong growth and fat profits, Fiat Chrysler Automobiles (FCA) sees potential for much more, banking on the rugged brand to vie with global giants such as Toyota, Volkswagen and Ford.

The Italian-American car maker is forecasting Jeep’s annual sales to jump about 30% in 2018 to 2-million vehicles and predicts the brand could eventually deliver 7-million units a year as appetite for sport utility vehicles (SUVs) surges worldwide, CE Sergio Marchionne has said. That would continue impressive growth for a US- focused off-road brand that had little more than 300,000 deliveries in 2009, when Fiat took control of Jeep in its acquisition of Chrysler.

Even if Marchionne has much reason to see more growth ahead for SUVs, such expansion would be unprecedented. Jeep would need at least one model to sell more than 1-million a year. Only the Toyota Corolla, an affordable compact unlike anything Jeep offers, averaged that much global volume since the start of the decade, according to IHS Markit.

While Marchionne, 65, helped stoke speculation about Jeep’s future by saying Fiat Chrysler could spin off more divisions like it did with its Ferrari supercar unit, the brand is all but untouchable, despite drawing interest from China’s Great Wall Motor.

Jeep has emerged as the focal point of the car maker’s massmarket car plans, without which the company could scarcely attract a partner necessary to weather the disruption looming over the car industry.

“I don’t see how FCA could sell it,” Maryann Keller, a longtime industry analyst and consultant, said of Jeep. “Whatever they got for it would hardly replace what they lost.”

Fiat Chrysler executives are considering options including a plan to spin off the upscale Maserati and Alfa Romeo divisions and its car-components operations, according to people familiar with the discussions.

The company intends to keep Jeep to anchor the mass-market car business that also includes the Dodge and Ram brands, said the people, who asked not to be identified because the deliberations are private. A Fiat Chrysler spokesman declined to comment. / Bloomberg