We have heard whispers in the past weeks that Chinese automakers were vying to purchase Fiat Chrysler Automobiles (FCA).
Automotive News reports today that Great Wall Motor Company has confirmed its intent to purchase the Jeep brand separately.
In the past weeks, Automotive News reported meetings in China between FCA executives, Donfeng Motor Group, Geely Automotive Holdings, and Guangzhou Automobile Group. FCA stated last week that an offer from an unknown Chinese automaker was rejected, but no details were released.
This follows earlier reports that the Jeep brand is worth more than all of Fiat Chrysler combined, with Jeep sales expected to make up nearly half of FCA’s sales by 2018.
In an email from Wang Fengying, president of Great Wall, Automotive News learned Great Wall is “connecting with FCA” to begin negotiations to purchase the Jeep brand. FCA still will not confirm that it was approached by Great Wall.
It is no wonder why companies want to acquire Jeep—the brand boasts international recognition dating back to its World War II roots. In the decades since, Chrysler purchased Jeep from American Motors Corporation, Fiat North America merged with Chrysler, and there have even been speculations of General Motors buying FCA.
Shares in Fiat Chrysler Automobiles jumped 7.4% in New York on Monday and have jumped more than a quarter this year, valuing the company at just over $19bn (£14.7bn).
However, the Jeep brand alone could be worth as much as $27bn, according to Morgan Stanley analysts. Jeep sold 1.4 million vehicles last year and aims to shift 2 million vehicles annually by 2018.
Great Wall sold just over 1 million vehicles last year - mostly in China, which is now the world's largest car market. Bill Russo, a former Chrysler executive now with Gao Feng Advisory Group, said he believed Great Wall wanted Jeep rather than all of FCA and its debts of about $4.9bn.
"Jeep is the crown jewel of Fiat Chrysler in terms of brand and equity," he said. Great Wall is known for its SUVs, vehicles, which are popular in China, so a deal would be "quite complementary", Mr Russo added.
Earlier this year, it officially launched a new premium SUV brand called Wei, which potentially could tap into the US market. Fiat Chrysler chief executive Sergio Marchionne is seeking a partner or buyer to help it manage rising costs, emissions regulations and the development of electric and self-driving cars.
What does this mean for Jeep customers? Nothing yet until we get concrete details regarding any possible merger.
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