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Can promise of adventure revive Jeep’s fortunes?
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“The world is huge. I want to go out and see it,” read a short resignation letter that went viral on China’s Internet earlier this year, resonating with the discontent many people feel with their workaday lives.
The iconic US Jeep brand of SUV is hoping to capitalize on that sort of restless desire to break free.
“In everyone’s heart, there is a Jeep.” With this marketing motto, the brand is confident to restart production in China this year to pursue volume, first with new Jeep Cherokees.
Of course, the idea of adventure often never gets beyond the daydream stage, and that’s the risk for Jeep’s ramped-up production. The itch to go off-road may not translate into actual purchases.
Jeep was once synonymous with SUVs in China because it introduced the first of that model vehicle to this country under a joint venture with BAIC back in the early 1980s.
The turbulence of its parent’s shareholding changes since 2007 resulted in suspension of local production until the launch last month of a new sales company in China called GAC Fiat Chrysler.
The company was established to coalesce the interests of GAC, the Chinese manufacturing partner, and Fiat Chrysler, which owns Jeep as well as Fiat, Chrysler and Dodge brands.
But the new company’s plans are clearly centered on Jeep. The new Jeep Cherokee will be followed by another two models in local production before 2016, making a growing product portfolio that will eventually cover all segments of the SUV market.
In a sense, the company is trying to recoup all those lost years, when SUV-mania gripped China. That trend shows no signing of abating. Bucking the slowdown in domestic auto sales, the SUV segment grew at a pace of more than 40 percent in the first seven months of this year.
The problem for Jeep is that the market is no longer defined by its vehicles. Most of the best-sellers, like the VW Tiguan, the Honda CR-V and the Audi Q5, are technically big shells placed on chassis for sedans to make a comfortable ride with an elevated stance.
SUV makers are fond of slogans like “let it go” and “be adventurous.” The image of life without constraints does appeal to many consumers who are willing to pay a bit more than the price of a sedan to drive an SUV.
But how many SUV fans in China are willing to pay even more to get an authentic off-track experience, like Jeep’s specialty? The brand sold 88,000 cars in China last year, up 49 percent from 2013, accounting for only 2 percent of China’s overall SUV sales.
Of course, passions are often tempered by money. Some SUV buyers are thinking with their wallets more than their hearts.
The market positioning of Jeep, based its long-standing import status, has changed from being a mass-market brand in the United States to something of a little luxury in China. But its rugged character, which is apparent in its design, may be a hard sell to consumers who equate exquisiteness and sophistication with premium prices.
China’s car consumption is still in that stage of “face” consumption — buying to show off. Owning a Jeep is like owning an expensive pair of jeans bought just for a splurge of fun. The company needs to convince buyers that it is something beyond the Audi and BMW SUVs, now selling at discounted prices with “smart-chic” images.
To convince consumers that their money is well spent may be tricky for Jeep after it begins local production.
Jeeps sold through parallel import at cheaper prices and competing with models at heavy discounts may force the brand to lower its price expectations.
That’s what happened with another luxury SUV brand — the Land Rover with its first Chinese-made model, the Evoque. It used to be a hot-seller in constant short supply.
Starting local production in China with the new Cherokee, a city SUV model just like Evoque, Jeep has to remain realistic and not go too wild.
“Freedom,” a key message conveyed by the Chinese names of its various products, needs to be more than just a tantalizing dream.
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