Fiat Chrysler (FCA) in China: Strategy to reach sales of 850,000 units in 2018

Plans to launch eight local models and annually produce 775,000 units by 2018

2014/11/28

Summary


Fiat Chrysler's sales in China  In May 2014, the newly-merged Fiat Chrysler Automobiles N.V. (FCA) announced its new global 5-year business plan (2014-2018) for FCA Group, including FCA's Chinese enterprises. This report describes FCA's new business plan, including its sales strategies, model plans and plans for expanding its production capacity in China based on FCA's 5-year business plan, for up to 2018.

FCA targets to sell 850,000 passenger cars in China in 2018

  FCA set its 2018 sales target for passenger cars in China at 850,000 units, up 5.6 times from the 2013 result of 129,000 units. FCA expects huge increases in sales of locally-produced Fiat models as well as in sales of Jeep models, which the company also plans to produce in China.

FCA to expand passenger car production capacity to 775,000 units by constructing Guangzhou branch plant, etc.

  To achieve this ambitious vehicle sales target, FCA will expand its annual production capacity for passenger cars in China to 775,000 units by 2018. To do so, FCA is constructing a new branch plant in Guangzhou City, Guangdong Province. The company is also expanding its main plant in Changsha, Hunan Province.

  In line with these actions, FCA will expand its production capacity for powertrains in China to annually produce  820,000 engines and 700,000 transmissions by 2018.

FCA to offer lineup of 19 passenger cars, including imported models

  According to FCA's model plans, production of Jeep models will restart in China in 2015 at the earliest. FCA expects Jeep models will greatly help the company to achieve its sales target. The company will increase the number of locally-produced models from two at present to eight by 2018. The company will also start the import and sales of an Alfa Romeo model to rival with German luxury cars.



Related Reports:
  * Fiat Chrysler's new five-year plan: Sales target of 7 million units by 2018 (Jun. 2014)
  * Beijing Auto Show 2014: Fiat-Chrysler uncovers Jeep design concept and Fiat Ottimo (May 2014)



FCA's sales strategy in China: to achieve sales of 850,000 units in 2018

FCA's new sales strategic plans in China between 2014 and 2018

Sales policies in China * To increase FCA's brand power and strengthen its vehicle lineup in China
* To promote local production of its flagship models in an effort to increase price competitiveness by avoiding high customs duties
* FCA will not only collaborate with Guangzhou Automobile Group Co., Ltd. (GAC Group) via GAC Fiat Automobiles Co., Ltd. but also will consider a capital participation in or a capital alliance with GAC Motor Co., Ltd., a subsidiary of GAC Group for their own brand passenger cars
* To strengthen its vehicle lineup to offer a total of 19 vehicle models, including at least 11 imported vehicles but excluding joint venture (JV) brand models, by 2018
* To build up its sales channels (dealerships/sales networks)
Sales targets <2014>
235,000 units (2013 result: 129,000 units)
  Note: Figures represent the total number of FCA Group's vehicles sold in China, including exports and imports. The same applies below.
Breakdown ▽ Locally-built passenger cars: 100,000 units
  (The 2013 result was 47,800 units. Only Fiat vehicles in 2013 and 2014)
▽ Imported cars: 135,000 units
  (Reference) Imported car sales results in 2013:
  (1) Chrysler, Jeep, Dodge and other Chrysler group vehicles: 89,000 units (only vehicles imported and sold), a 78% increase year-over-year (y/y)
  (2) Ferrari: 458 units in China (454 units in 2012)
  (3) Maserati: Increased 334% y/y to 3,800 units (ranked second worldwide after the U.S.)
<By 2018>
  850,000 units including 500,000 Jeep vehicles. FCA aims to achieve sales of 1.1 million units (five times the 2013 result) in the Asia-Pacific region, including China and India.
Sales network ▽ Plan to increase the number of dealerships (expand its sales network)
  396 dealerships at the end of 2013 (breakdown: 208 Fiat dealerships, 188 Chrysler dealerships)
    ⇒ 648 dealerships by the end of 2014
    ⇒ 360 Chrysler dealershipsby the end of 2016
(Reference)
FCA's key organization and frameworks in China
* GAC Fiat Automobiles (GAC Fiat): Changsha head office and main plant (car and engine production lines, in operation), Guangzhou branch plant (for passenger car production only, under construction with operation slated to start in 2016)
* FCA APAC Headquarters: FCA's Asia-Pacific regional headquarters. It employs 377 people as of the end of 2013.
* FCA China Sales: FCA's regional sales headquarters in China. It has 141 employees as of the end of 2013.
* APAC Engineering Center: FCA's development center for the Asia-Pacific region. It employs 311 people as of the end of 2013.
* APAC Manufacturing & Powertrain: FCA's powertrain plant for the Asia-Pacific region. It employs 210 people as of the end of 2013. See the tables shown later for the company's car, engine and transmission plants in China.

Source: FCA's press releases and media reports

 

Online sales of two FCA's China-made models begin to provide new sales channel

 In September 2014, GAC Fiat started the online marketing of two models produced at the JV's plant in China in an effort to create a new sales channel. GAC Fiat opened a sales agent (URL: http://gacfiat.tmall.com) on the JV's website named Tianmao to sell the GAC Fiat Viaggio middle-class sedan and Ottimo hatchback on the Internet.

 

 



FCA's model plans in China: to build lineup which offers over 19 models

  As of November 2014, FCA plans to build a passenger car lineup to sell at least eight Chinese-built models under the Fiat and Jeep brands and at least 11 imported models, excluding Maserati and Ferrari cars, in China by 2018.


  FCA's new models will be equipped with new fuel-saving gasoline engines. FCA intends to stop the use of continuously variable transmissions (CVTs). Instead, the company will increase the use of multi-speed automatic transmissions (ATs) and dual dry clutch transmissions (DDCTs).

 

Model strategy * FCA expects that Chinese-built Fiat, Jeep and Chrysler brand vehicles will help the company to achieve its sales target in China. The company will introduce new Jeep models in China and the U.S. simultaneously (based on an agreement concluded between GAC Group and Chrysler in January 2013).
<Fiat>
  FCA will increase the number of Fiat models built in China from two as of November 2014 to five or more by 2018.
<Jeep>
  FCA will restart producing Jeep models in China in 2015 and afterward to offer a lineup of three locally-built models by 2018. (Production of a Jeep model is expected to begin at GAC Fiat's main plant in Changsha in December 2015 at the earliest.)
<Chrysler>
  FCA will bolster the import and sales of Chrysler models. Resumption of local production in China by 2018 is under discussion.
* As part of FCA Group's model plans and sales expansion policies, FCA aims to increase global sales of its premium brand models. FCA intends to expand sales of its premium brand models, such as the Alfa Romeo and Maserati, in China. China is ranked with the U.S. as a big market for luxury cars.
<Alfa Romeo>
  The import and sales of the model will begin in China by 2018.
* In June 2014, FCA announced that it will partner with GAC Group to develop new energy vehicles, including electric vehicles and plug-in hybrid vehicles, and the Chinese JV's brand models. Other details have not been disclosed (according to an interview with Feng Xing Ya, the Executive Vice President of GAC Group and the Chief Director of GAC Fiat).
▽ FCA's strategy for powertrains of Chinese vehicles (in Asia-Pacific region)
Drive system improvement plan (excerpts) ▽ Transmissions mounted on vehicles in the Asia-Pacific region: To increase the use of multi-speed ATs and DDCTs; to stop the use of CVTs
  FCA's plan for the proportions of transmission types for all of vehicles built at the company's plants in China and other Asia Pacific regions is detailed below (the items below are "Type: 2013 proportions ⇒ 2018 proportions (trend)").
                                     2013      2018
  (1) 8-/9-speed AT:           8% ⇒   46% (substantial increase)
  (2) 5-/6-speed AT:         47% ⇒     1% (substantial decrease)
  (3) DDCT:                      18% ⇒   33% (substantial increase)
  (4) CVT:                           9% ⇒    0% (no longer mounted)
  (5) 5-/6-speed MT:          18% ⇒  20% (modest increase)
▽ FCA to start introducing newly-developed compact gasoline engine globally in 2015
  FCA is developing a compact fuel-saving gasoline engine equipped with an automatic start/stop system and turbo charger. The company plans to start introducing this new engine globally in 2015.

Source: FCA's press release and media reports

 

 



China-made models: to build five models at Changsha main plant

  In May 2014, FCA announced its plan to build a locally-produced vehicle lineup, comprising five Fiat models and three Jeep models of Chrysler Group LLC, in China by 2018. The company also announced its policy to determine whether or not it restarts local production of other Chrysler models after thoroughly studying the market conditions.

  Production of local models by plant is as follows.

GAC Fiat's main plant in Changsha

  A total of four models, including three Fiat models and one Jeep model, will be built at the plant by the end of 2015. FCA will start producing another Fiat model (D-segment sedan) at the plant in 2016 to offer a total of five passenger car models.

GAC Fiat's branch plant in Guangzhou

  The plant is slated to begin operations in 2016. FCA will start producing two Jeep models at the plant by the end of 2016. FCA plans to add one Fiat model to the production lineup in 2018 to produce a total of three models at the plant.

 

FCA's model launch schedule by plant in China

Note: Listed in descending order of production start. The same applies to the tables shown later.
▽ GAC Fiat --Changsha main plant (Hunan Province)
Model Launch timing Details
Fiat Viaggio 2012  Fiat dissolved the JV between Fiat and the former Nanjing Automobile Group and terminated production in China. Later, Fiat formed a new JV with GAC Group. The Fiat Viaggio sedan is the first Fiat model produced by the new JV in China (the first Fiat model after the company restarted production in China). As of November 2014, the standard selling price starts from CNY 108,800.
 A facelifted version will be released in 2015.
Fiat Ottimo After Mar. 2014  The Fiat Ottimo hatchback is the second model produced by GAC Fiat at the JV plant in Changsha City. The Fiat Ottimo is available in five variants. The standard selling price ranges from CNY 108,800 to CNY 158,800. (According to Fiat's model plans, the Ottimo will undergo a partial redesign in 2017.)
 The Ottimo is built on a platform named Compact US Wide (CUSW). It is powered by the 1.4T-JET turbo engine with a displacement of 1.4 liters, mated to a five-speed manual transmission or seven-speed DCT.
 A sporty variant was added to the Fiat Ottimo in April 2014, one month after the model hit the market. The standard selling price is CNY 148,800 or CNY 162,800. It features sporty designs, such as unique 17-inch wheels and many chromium-plated decorations on the interior and exterior.
Fiat Ottimo
Crossroad
(before or after Mar. 2015)  This is a new C-segment crossover SUV based on the Fiat Ottimo hatchback locally produced in China.
Jeep
Cherokee
(after the middle of 2015)  The import and sales of the Cherokee began in China in the second half of 2013. This D-segment SUV will be the first locally-produced Jeep model after FCA restarted production in China.
Fiat D-Sedan
(tentative name)
(before or after Sep. 2016)  This new Fiat sedan is a D-segment vehicle, which the company plans to produce in China.
▽ GAC Fiat --Guangzhou branch plant (Guangdong Province, slated to begin operations in 2016)
Model Launch timing Details
Jeep all-new Renegade (the first half of 2016)  The new Renegade compact SUV will be the second Jeep model produced by GAC Fiat. This B-segment SUV offers class-leading off-road driving perfomances. The nine-speed AT and advanced safety technologies appeal to consumers.
 Production of the Jeep Renegade will begin at the Melfi plant in Italy at the end of 2014. Later, this global compact SUV will also be produced in China and Brazil.
Jeep compact SUV
(tentative name)
(after 2016)  This all-new C-segment compact SUV (product code: 551) will be the third Jeep model after FCA restarted production in China. This Jeep model is the one which FCA and GAC Group agreed to jointly develop for Chinese consumers.
 This new model is a successor to the Compass and Patriot currently available in China. The import and sales of these two C-segment SUV models will be terminated at the end of 2015.
Fiat all-new 500X (after the first half of 2018)  This all-new B-segment SUV is a fully redesigned version of the current Fiat 500X. Local production of the all-new Fiat 500X will begin in the first half of 2018. Prior to production of the new model in China, the import and sales of the current model will begin in the first half of 2015.
 The new Fiat 500X will share a platform with the new Jeep Renegade.

Source: FCA press release and media reports

 

Imported models: to build lineup of over 11 models for sale in China by 2018

  FCA will build a lineup of at least 11 imported models bearing five brands:Fiat, Alfa Romeo, Jeep, Chrysler and Dodge (excluding Maserati and Ferrari), by 2018 to market them in China. The imported Alfa Romeo will be the first Alfa Romeo model introduced by the company in China. The lineup will comprise four Fiat models, three Jeep models, two Chrysler models, one Dodge model and one Alfa Romeo model.

 

Model Launch timing Details
Fiat 500,
Fiat 500C
After Mar. 2013  The import and sales of this A-segment compact passenger car bearing the Fiat brand will continue until 2018. As of November 2014, the standard selling price starts at CNY 169,800 for the Fiat 500 and at CNY 209,800 for the Fiat 500C.
Fiat Freemont From Mar. 2013 to Aug. 2016  This Fiat-brand D-segment crossover SUV is a rebadged model of the Dodge Journey. The standard selling price of the Fiat Freemont starts from CNY 249,800. The import and sales of the model in China will be terminated by about August 2016.
Fiat 500X (from the first half of 2015 to the first half of 2018)  This Fiat-brand B-segment SUV is a sister model of the Jeep Renegade. The import and sales of the Fiat 500X will start in China in 2015 before the local production and sales of the fully-redesigned Fiat 500X begin in the first half of 2018.
Dodge Journey (before or after May 2016)  The import and sales of this Dodge-brand D-segment crossover SUV in China are scheduled to end in the first half of 2016.
Chrysler Grand Voyager (mid-2016)  This Chrysler-brand E-segment MPV (minivan) will be fully remodeled in 2016.
Jeep all-new Wrangler (mid-2017)  The all-new Jeep Wrangler, a D-segment SUV, is the latest version of the currently imported and marketed Wrangler, which will be remodeled in 2017. Other details have not been disclosed.
Jeep all-new Grand Cherokee (the second half of 2017)  This Jeep model is a fully-redesigned E-segment SUV.
Jeep Grand Wagoneer (after mid-2018)  This Jeep model is a new three-row full-size luxury SUV. The Jeep Grand Wagoneer will belong to a segment, which is positioned higher than that of the Grand Cherokee, although other details have not been disclosed.
Chrysler 300 (after the second half of 2018)  This Chrysler-brand luxury sedan will be remodeled in the second half of 2018. FCA has a plan to consider the possibility of locally producing the Chrysler 300 after thoroughly studying the Chinese market conditions.
 The Chrysler 300 will undergo a partial redesign in 2015. The partially-redesigned model was exhibited at the Los Angeles Auto Show.
Alfa Romeo brand model (before 2018)  As part of the company's strategy for expanding sales of luxury cars, FCA will start the import and sales of the Alfa Romeo model in China, although the launch timing, and other model details have not been disclosed.

Source: FCA press release and media reports

 

Chinese authority fines Chrysler CNY 31.68 million for violation of Antimonopoly Law

 In September 2014, the Chinese government announced that it has fined Chrysler (China) Auto Sales Co., Ltd., Chrysler's sales company in Shanghai, a total of CNY 31.68 million (equivalent to 3% of Chrysler's sales in China in the 2013 calendar year). The government claims that the sales company violated China's Antimonopoly Law. The Chinese government has also fined three major dealers, the sales company's subsidiaries in the Shanghai region, a total of CNY 2.14 million over the same violation. One of the dealers, which played a leading role, was fined an amount equivalent to 6% of its sales for the same period while each of the other dealers was fined an amount equivalent to 4% of each sales for the same period.

 

 



Production volume and production capacity by plant in China

FCA's production in China
FCA 's production in China by plant

  FCA will increase its annual production capacity for passenger cars in China from 195,000 units as of November 2014 to 775,000 units in 2018 to achieve its sales target of 850,000 passenger cars in China in 2018. To do so, the company will expand GAC Fiat's main plant for passenger cars in Changsha, Hunan Province and construct a new branch plant in Guangzhou City, Guangdong Province. GAC Fiat is a JV production company between Fiat and GAC Group.


  FCA will increase the annual production capacity of the new branch plant in Guangzhou to 160,000 units in 2016 and to 275,000 units by the end of 2018. FCA will also increase that of the main plant in Changsha to between 250,000 and 300,000 units in the mid-term and ultimately to 500,000 units by the end of 2018.


  In line with these activities, FCA intends to expand its production capacity for powertrains in China. The company will increase the annual production capacity of the engine production lines next to GAC Fiat's main plant in Changsha from 140,000 units at present to 820,000 units by 2018. FCA also plans to expand the production lines of Hangzhou Iveco Automotive Transmission (HAVECO), a JV production company for transmissions in Hangzhou, Zhejiang Province, so as to increase the annual production capacity for transmissions from 180,000 units at present to 700,000 units.


Passenger car production capacity: to increase to 775,000 units in 2018

1,000 units
<Production of passenger vehicle>
JV plant Production model
(*Note)
Production results
(by calendar year)
Annual capacity
2010 2011 2012 2013 As of the end of 2013 After expansion
(planned year)
GAC Fiat
(Fiat 50%, GAC 50%)
Mother plant of Changsha, Hunan prov. Viaggio - - 13.51 47.83 195
(in two  shifts)
250~300 (over a mid-term)
⇒ 500 (by 2018)
Ottimo (launched in 2014)
Cherokee (The model will be added at the end of 2015 at the earliest)
Guangzhou plant (Guangdong prov.) Renegade, Jeep little SUV
(product code "551")
(Construction of the plant began in June 2014 with operations slated for the first quarter of 2016. Initially, only Jeep models will be reportedly built.) - 160 (from 2016)
⇒ over 275 (by 2018)
Soueast Motor Fuzhou plant (Fujian prov.) Chrysler Grand Voyager 0.13 0.23 0.04 (Consignment production discontinued)
Dodge Caravan 1.01 0.01 (Consignment production discontinued)
Total 1.14 0.24 13.55 47.83 195 Over 300 (after March 2016)
⇒ 410 - 460 (over a mid-term)
⇒ over 775 (by 2018)

Note: FCA's sales target for Fiat, Jeep and Chrysler models in China for 2014 is set at over 220,000 units, including exports and import sales (the actual result for 2013 was over 137,000 units). Of which, its sales target for only Fiat vehicles built by GAC Fiat in China is set at 100,000 units (the 2013 result was 48,000 units).

 

▽ GAC Fiat's Guangzhou branch plant is under construction with operations slated for 2016; FCA to have annual production capacity of 275,000 units in Guangzhou City
 In June 2014, GAC Fiat (head office and main plant in Changsha City, Hunan Province), a 50-50 JV between Fiat and GAC Group, started construction of a new branch plant (Guangzhou Branch of GAC Fiat: second passenger car plant) in Panyu District, Guangzhou City. The new branch plant is slated to begin operations in the first quarter (January to March) of 2016.
 FCA will start producing the new Jeep Renegade at the Guangzhou branch plant in 2016 when the branch plant comes on stream. Then, production of the new Jeep compact SUV (product code: 551), which shares the platform with the Renegade, will begin at the branch plant. In the first half of 2018, FCA will add the new Fiat 500X, which shares the platform with the Jeep Renegade, to the branch plant's production lineup.
 The total investment in the construction of the branch plant amounts to CNY 4.23 billion. After the completion of the first-phase work, the branch plant will have lines for stamping, welding, coating and assembly, with an annual production capacity of 160,000 passenger cars. Later, at the completion of the second-phase work, the annual production capacity will be expanded to 275,000 units.
 For the time being, the branch plant will not have an adjoining engine production line. Engines will be procured from the engine production lines next to the Changsha main plant. To reduce production costs, FCA will share resources for parts procurement, distribution, production inspection and measurement with GAC Motor Co., Ltd., GAC Group's plant for their own passenger cars. GAC Motor is adjacent to the branch plant.

 

Powertrain prodution capacity: to annually produce 820,000 engines by 2018

 FCA will boost the production of engines for passenger cars in China. The company will increase the annual production capacity of the engine production lines next to GAC Fiat's Changsha main plant from 140,000 units at present to 820,000 units by 2018. In line with the expansion of the production capacity, FCA will increase the number of produced engine models from one at present to five by 2018. As of May 2014, FCA does not have a plan to construct another new facility for engine production other than the expansion of the engine production lines next to the Changsha main plant.


 FCA will also boost the production of transmissions in China. In May 2014, the company announced that it will expand the transmission production lines of HAVECO in Hangzhou City, Zhejiang Province to increase the annual production capacity from 180,000 units of two types at present to 700,000 units of three types by 2018.

 

Powertrain production capacity in China (including production capacity by plant)

1,000 units
JV Plant Production model Employee
(number of persons)
Production volume (calendar year) Annual capacity
2011 2012 2013 As of
May 2014
After
expansion
(planned
year)
▽ Car engine
GAC Fiat Engine plant at Changsha plant 1.4L「1.4T-JET」
Turbo engine
(to produce 5 engines by 2018)
2,821 - (Production started in 2012. Production results were not disclosed.) 140 220 - 370
⇒ 820
(by 2018)
Guangzhou branch plant - (FCA's 5-year plan [up to 2018] does not include a plan to construct an adjoining engine production line. Still, construction of an additional line in future remains possible.)
▽ Car transmission
Hangzhou Iveco Automotive Transmission (HAVECO) Hangzhou mother plant
(Zhejiang prov.)
5-speed MT 5MTX, AMT 774 54.8 61.6 57 180 (as of the end of 2013)
⇒ 330
700
(by 2018)
7-speed DCT 7DDCT n.a.

 

 



(Appendix) FCA's production in China

unit

2005 2006 2007 2008 2009 2010 2011 2012 2013
Grand total (FCA China) 46,600 37,242 26,742 12,230 1,305 1,131 248 13,546 47,828
▽ Total by brand
2005 2006 2007 2008 2009 2010 2011 2012 2013
Breakdown by brand Fiat 32,787 31,400 16,083 - - - - 13,505 47,828
Jeep 13,813 3,364 18 - - - - - -
Chrysler - 2,478 10,641 11,585 1,267 126 234 41 -
Dodge - - - 645 38 1,005 14 - -
▽ Total by production company and model
2005 2006 2007 2008 2009 2010 2011 2012 2013
GAC Fiat Viaggio (Production of Fiat models in China stopped in 2008 and resumed in 2012.) 13,505 47,828
Ottimo (production started)
Total 13,505 47,828
2005 2006 2007 2008 2009 2010 2011 2012 2013
Soueast Motor Chrysler Grand Voyager (Consignment production of Chrysler and Dodge models started in 2007.) 1,588 2,169 277 126 234 41 (End of the
consign-
ment
production)
Dodge Caravan 0 645 38 1,005 14 -
Total 1,588 2,814 315 1,131 248 41
2005 2006 2007 2008 2009 2010 2011 2012 2013
Former Beijing Jeep, or Beijing DCX Cherokee 13,813 3,364 18 - 0 (The production companies were reorganized into Beijing Benz. Local production ended.)
Grand Cherokee -
Chrysler 300C - 2,478 9,004 822 17
Sebring - - 49 8,594 973
Total 13,813 5,842 9,071 9,416 990
2005 2006 2007 (The former Nanjing Fiat was dissolved. The site is used for Shanghai VW's Nanjing branch plant for passenger cars.)
Former Nanjing Fiat Palio 18,219 15,238 7,835
Palio Weekend 4,430 4,476 2,105
Perla - 2,534 3,061
Siena 10,138 8,684 2,755
Unique 0 468 327
Total 32,787 31,400 16,083

Note: DCX is an abbreviation for the former DaimlerChrysler Group.

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