Global push fuels Jeep sales records
Melfi, Italy — The globalization of Jeep is pushing ahead, with plants from Detroit and Toledo to Brazil, Italy and Asia benefiting from expansion of the quintessential American brand.
Jeep, with roots stretching to World War II, was produced exclusively in the United States for most of its nearly 75-year history. When China starts building Jeeps again later this year — nearly a decade after former owner Daimler AG pulled out — they will be produced on four continents.
The increased production should lead the brand to its fourth-consecutive year of record global sales. Fiat Chrysler Automobiles NV reports sales of the SUV brand were up 20 percent worldwide through May. That puts the Jeep on pace to top record sales of more than 1 million vehicles in 2014, which was a 39 percent increase from a record-setting 2013.
Karl Brauer, senior analyst for Kelley Blue Book, a California-based vehicle valuation and automotive research company, expects nothing to slow the brand's growth in the foreseeable future.
"Only a seismic shift in the global economy will derail Jeep's growth trajectory," he said. "The demand for SUVs in every market plays right into Jeep's product line, and it combines with the brand's international reach to position Jeep for continued success for the foreseeable future."
FCA plans to produce 1.9 million Jeeps by 2018 at 10 plants in six countries: the U.S., Italy, China, Brazil, India and one other yet-to-be-announced country. Two years ago, only 798,000 rolled out of four plants in the United States.
This year's increase largely is due to Renegade production starting in September in Melfi, Italy, which is at capacity and turning out about 1,100 Renegades and Fiat 500X models a day. Both share the same vehicle underpinnings.
Diesel-powered Renegades can be seen throughout Italy — from northern cities such as Maranello and Turin, where Italian automaker Fiat was founded, to Naples in the south.
Ennio Meccia, Melfi Plant assembly manager, said employees spent a lot of time learning about Jeep and its American heritage, as many were previously unaware of it. "The Jeep brand is an American icon," he said. "We spent many, many efforts and lots of time in cultural change management."
Meccia said the Renegade brought a "dramatic change" to the plant. "We were (working) one week per month, more or less," he said. "Now we're working (nearly 24 hours a day), seven days per week."
By year's end, 250 new workers who started this week — and streamlining of production operations — are expected to help boost capacity to 1,200 vehicles a day, according to plant manager Nicola Intrevado. He said the Melfi facility is on track to produce about 313,000 Renegade and Fiat 500X models this year. Production is split evenly between the vehicles, but depending on demand, that could shift.
In 2014, the Melfi Plant in a rural area of southern Italy became the first in history to exclusively produce a particular Jeep model outside of the U.S., when it started building the Renegade. About $2 bilion was invested in the plant and a supplier park to produce the two vehicles. It is the largest industrial investments in the region ever, according to Fiat Chrysler.
"With the Renegade and 500X selling as they are, it's really caused the blood to flow in the organization here," said Fiat Chrysler Head of Group Purchasing Scott Garberding, who started with Chrysler in 1993 and now is based in Italy. "We're working really hard right now to support growth, which is something that didn't happen for a number of years."
Halfway across the globe in the United States, plants are running at capacity or higher to build as many Wranglers, Cherokees and Grand Cherokees as possible.
In Toledo, two crews work 20-hour shifts on weekdays and two 10-hour shifts on the weekends to produce the Wrangler and Cherokee models. Toledo Assembly Complex has been rolling out nearly 2,000 Jeeps on some days — 100 more than regularly planned.
"Our guys are keeping their nose to the grind and keep building them Jeeps," said UAW Local 12 President Bruce Baumhower.
Baumhower said he hopes the plant's continued dedication to Jeep production amid the "turmoil surrounding" the plant's employees will "keep getting the attention" of Fiat Chrysler CEO Sergio Marchionne. Marchionne sent a chill through Toledo and Ohio in October, when he said significant changes to the next-generation Wrangler — such as extensive use of aluminum — could cause it to be moved to another plant. The great-grandfather of the Wrangler was first made in Toledo for World War II.
Marchionne has said another vehicle would replace the Wrangler without losing employees, but Toledo workers and public officials continue lobbying to keep production of the storied SUV in Toledo.
In Detroit, the Jefferson North Assembly plant, home of the Grand Cherokee, operates three crews, working two 10-hour shifts a day, six days a week — and two of every three Sundays a month. The plant also makes the Dodge Durango.
Jeep's only other U.S. plant in Belvidere, Illinois — which produces the outgoing Jeep Patriot and Jeep Compass — is running three crews, six days a week as well. It also makes the Dodge Dart.
Jeep is a centerpiece of an ambitious five-year plan of Marchionne to grow Fiat Chrysler's global sales to 7 million by 2018, a 60 percent increase from 2013 — the first year of the plan. During the 2015 Detroit auto show in January, Marchionne said globalization of the brand is the key mission for the year.
"This year is a big year," he said. "We need to keep on pushing Jeep. … The Jeep and Alfa are the biggest parts of the growth."
The companyopened a $2 billion Jeep plant in Brazil earlier this year to produce the Renegade and two future models.
Jeep, according to some industry analysts, was the driving force behind Fiat SpA's bid for the struggling Chrysler Group LLC in 2009. That was the beginning of what is now known as Fiat Chrysler, the world's seventh-largest automaker.
"Jeep was the clear prize within the Chrysler Group when Marchionne approached the U.S. government with a plan to merge Chrysler and Fiat," said Brauer, of Kelley Blue Book. "He knew the power of the brand on a global scale and wanted access to it more than any other component in the Chrysler Group. And, judging by the growth and profit among the Chrysler divisions today, he was right."