So, Is Jeep Really Moving To China, Or What?

October 29, 2012

Update: See below

Last week, Bloomberg News ran a story with this headline: "Fiat Says Jeep Output May Return to China as Demand Rises".

There are three ways you could look at that. 

1. You could cock your head to the side like Nipper the RCA dog and wonder what the heck it means.

2. You could assume that the writer simply chose a clumsy headline for a story that should've been titled something like, "Jeep May Reopen Factories In China".

3. You could assume that Chrysler's Italian overlords are moving the design, research, and manufacturing facilities of one of America's most popular automotive brands to China (for cheap labor, less regulation, more incentives, take your pick), thus hastening the arrival of the End Times.

Most readers probably chose option #1 or #2. However, a handful of politicians and pundits selected option #3 without bothering to read the article and suss out the facts. This is how rumors get started.

As we pointed out last week at Motor Authority, the Bloomberg story referred to the production of Jeep vehicles for the Chinese auto market: "Today, all Jeep models are produced in the United States, at assembly lines in Michigan, Illinois and Ohio. In the pre-Fiat days, however, some Jeep models destined for China were built in in Chinese plants."

That is exactly what the author of the Bloomberg article with the poorly worded headline was going on about. To streamline production during the Great Recession, Chrysler CEO Sergio Marchionne had Jeeps for the Chinese market built in the U.S. To meet growing demand, however, Marchionne is now in talks with Guangzhou Automobile Group about the possibility of making some -- or perhaps all -- Chinese-bound Jeeps in China itself.

And for those who still find fault with that, complaining that Marchionne is creating jobs overseas rather than in America, we should point out that the automaker is on a hiring roll in the U.S. In fact, just last week, Chrysler added 1,100 workers at a Detroit factory to help meet strong demand for the Jeep Grand Cherokee.

None of which is meant to excuse the Bloomberg article from being vague. The author could've clarified things early on, but instead chose to wait until the fifth paragraph to explain that the Chrysler/Guangzhou partnership would result in "adding Jeep production sites rather than shifting output from North America to China". So in fairness, we can understand how pundits might get confused.

Not that pundits are always interested in fairness, of course.

Update: To correct the multiple misreadings of the Bloomberg story currently floating around the blogosphere and on the airwaves, Marchionne has issued a statement on the matter:

Message From Sergio Marchionne Regarding Jeep Production

October 30, 2012 11:55 AM -- Chrysler Group’s production plans for the Jeep brand have become the focus of public debate. 

I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China. 

North American production is critical to achieving our goal of selling 800,000 Jeep vehicles by 2014. In fact, U.S. production of our Jeep models has nearly tripled (it is expected to be up 185%) since 2009 in order to keep up with global demand. 

We also are investing to improve and expand our entire U.S. operations, including our Jeep facilities. The numbers tell the story: 

  • We will invest more than $1.7 billion to develop and produce the next generation Jeep SUV, the successor of the Jeep Liberty -- including $500 million directly to tool and expand our Toledo Assembly Complex and will be adding about 1,100 jobs on a second shift by 2013. 
  • At our Jefferson North Assembly Plant, where we build the Jeep Grand Cherokee, we have created 2,000 jobs since June 2009 and have invested more than $1.8 billion. 
  • In Belvidere, where we build two Jeep models, we have added two shifts since 2009 resulting in an additional 2,600 jobs.
  • With the increase in demand for our vehicles, especially Jeep branded vehicles, we have added more than 11,200 U.S. jobs since 2009. Plants producing Jeep branded vehicles alone have seen the number of people invested in the success of the Jeep brand grow to more than 9,300 hourly jobs from 4,700. This will increase by an additional 1,100 as the Liberty successor, which will be produced in Toledo, is introduced for global distribution in the second quarter of 2013. 

Together, we are working to establish a global enterprise and previously announced our intent to return Jeep production to China, the world’s largest auto market, in order to satisfy local market demand, which would not otherwise be accessible. Chrysler Group is interested in expanding the customer base for our award-winning Jeep vehicles, which can only be done by establishing local production. This will ultimately help bolster the Jeep brand, and solidify the resilience of U.S. jobs. 

Jeep is one of our truly global brands with uniquely American roots. This will never change. So much so that we committed that the iconic Wrangler nameplate, currently produced in our Toledo, Ohio plant, will never see full production outside the United States. 

Jeep assembly lines will remain in operation in the United States and will constitute the backbone of the brand. It is inaccurate to suggest anything different. 

Sergio Marchionne

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