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China's Great Wall Motor signalled its intention to make an ambitious acquisition deal with Fiat Chrysler following a report that it wants to buy the Jeep brand
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Beijing: China’s Great Wall Motor signalled on Monday its intention to make an ambitious acquisition deal with Italian-American car maker Fiat Chrysler Automobiles following a report that it wants to buy the Jeep brand.
An agreement would be a major coup for the Chinese auto industry, though it may cause political waves in the US, where President Donald Trump has railed against his country’s trade imbalance with the Asian giant.
Great Wall Motor ranks only as the seventh biggest Chinese auto company in terms of sales—1.07 million in China and 17,400 abroad last year—but any purchase of FCA would take the firm to another level.
“There is an intention to make the purchase," a Great Wall Motor spokeswoman told AFP, though she declined to say if the possible deal would be for the entire auto giant or just one of its brands.
The US car industry publication Automotive News reported earlier that Great Wall Motor president Wang Fengying had said in an email that her company intended to buy FCA’s Jeep brand.
FCA said in a statement that it “has not been approached by Great Wall (Motor) in connection with the Jeep brand or any other matter relating to its business." Great Wall’s spokeswoman did not confirm whether the companies had made any contact yet but she confirmed the intention to make an offer.
Bill Russo, managing director of Gao Feng Advisory Group, said he believes Great Wall Motor is interested in just buying Jeep rather than buying all of FCA and inheriting its sizeable liabilities.
“Jeep is the crown jewel of Fiat Chrysler in terms of brand and equity," Russo, a former Chrysler executive, told AFP.
Great Wall is known for its sport-utility vehicles, which are popular in China, so a deal would be “quite complementary" for the company, the analyst said.
China is the world’s biggest car market and sales of SUVs soared by 45% last year, with nine million units sold, according to industry figures.
Fiat Chrysler sold 110,000 locally built cars in China in the first half of the year, in particular thanks to rising sales of Jeeps built by a joint venture with GAC Group.
With sales of its models ebbing in the US, a Chinese acquisition could offer a lifeline to Fiat Chrysler, in particular for its Chrysler, Dodge and Fiat brands.
FCA’s shares have soared on the Milan stock exchanges on reports of a potential deal.
FCA CEO Sergio Marchionne spun off Ferrari in 2015 and could do likewise with Alfa Romeo and Maserati, so selling any of its other brands to a Chinese investor could fit in with that corporate strategy.
“They could get a pretty good price for" Jeep, Russo said.
Great Wall Motor would not be the first Chinese auto company to make a major acquisition abroad.
Sweden’s Volvo was acquired by China’s Geely in 2010 and has enjoyed strong sales growth since, with the Chinese market accounting for 20%.
“We are definitely going to take our intention to buy (FCA) seriously," Great Wall Motor’s spokeswoman said.
“As for the plans for later stages, doing what on which day, this is an issue for the strategy of the top management level," she said.
Great Wall’s “interest in purchasing FCA highly fits our professional development path and strategy of globalisation", the spokeswoman said.
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