When I wrote last week about how Stellantis can rescue its brands, I focused almost entirely on its North American portfolio. In particular, Jeep is an extraordinarily cool and valuable brand that was unfortunately shortchanged under the company’s now-former leadership. Jeep is a global brand and, in particular, had a strong following in China until Stellantis pulled back.
Could a Chinese owner save Jeep and Chrysler? It’s an insane thing to suggest in this political environment, but there’s a curious (if not a bit proactive) logic to BYD taking over the company, and I’m going to tackle that in The Morning Dump today. The Chinese automaker is likely to overtake a bunch of automakers this year in global rankings, so it should have the cash.
All of these issues are ones that a new Stellantis CEO will have to consider. Who might that CEO be? There are lots of good guesses out there at the moment. Either way, we’re already starting to see a new approach from the automaker, which is looking to reintegrate with the larger world.
BYD Will Probably Outsell Ford, Honda, And Nissan
It’s impressive that BYD has gone from a maker of primarily cell phone batteries to an automaker that’ll climb into the same sphere as GM, Ford, Honda, and Stellantis in just about 20 years.
Of course, BYD’s timing couldn’t have been better. Formed in 2003, BYD Auto came around just as China decided it was going to invest heavily in building out an electric car industry. Much in the way that Tesla has a first-mover advantage in the United States, BYD used its early moves to get ahead of what would be literally hundreds of other startup electric car companies in the ensuing decades.
The company, led by an engineer, even attracted investment from Warren Buffet. It used its early lead and engineering prowess to slowly but surely build market share and expertise. With China’s renewed commitment to electrification, BYD sales have exploded over the last few years. A trip to a BYD dealership goes to show just how far BYD has gone to establish itself as one of the most important electric car companies in the world. The other, Tesla, even buys batteries from BYD.
According to Reuters, China’s latest plan to incentivize consumers to trade-in cars (Cash 4 non-clunkers) is likely to boost BYD beyond its own big goals for 2024 and ahead of Ford, Honda, and Nissan in global sales this year:
Aided by robust sales in China, BYD is on course to top its annual sales target of 4 million vehicles, which would put it ahead of Japan’s Honda and Detroit-based Ford for 2024.
The Chinese electric vehicle giant delivered 3.76 million vehicles in the first 11 months this year including 506,804 units sold in November.
Bolstered by strong sales led by a competitive lineup of models with its latest plug-in hybrid technology, BYD gained ground over rivals as China’s car sales grew in November at their fastest from a year earlier since January, thanks to government-subsidised auto trade-ins.
What’s remarkable about this is that BYD is doing all of this without a huge global footprint. BYD sells about 90% of its cars in China, as opposed to its main competitors, all of whom have bigger operations outside their domestic markets.
In the short term, this is fine for BYD, though the automaker is building a plant in Hungary and targeting expansion so that it isn’t wholly reliant on China. Selling Chinese-built cars in America is certainly a no-go for BYD, but what if BYD owned some American brands?
How Jeep Lost China, How BYD Could Save It
There was a fascinating story in last week’s SAI Weekly newsletter relating to how Jeep, once a huge brand in China, suffered after the Stellantis takeover.
FCA had a JV with GAC in China. They had ridden the Jeep brand to some significant success. People were offroading and posting to social, there were Jeep clubs and a community was building around the brand and products. Jeep, as in the US, were building a cult following in China. Jeep owners will know this – In the US anytime you drive past a Jeep Wrangler, the drivers will nod to each other recognizing they each play for the same team. That was happening a bit in China.
Also at this time circa 2020, FCA was shopping around looking for a partner. FCA was doing a serious dance with PSA that took a while to be consummated. That left FCA out in a lurch with the well dry. There wasn’t any real additional investment in the China market and no new products outside the Wrangler 4xe (the hybrid) for several years.
Great Wall Motor decided to pounce. They launched a few new brands and spun off a product that became the Tank brand which was aimed directly at Jeep. It targeted consumers who wanted boxy, rough, rugged and tough products àla Jeep. And Jeep’s share and brand began to erode.
I hadn’t heard much to explain Jeep’s sales decline, which seemed predictable given that almost every other foreign brand of any volume has suffered in China. The fact that the relationship with GAC turned cold quickly isn’t much of a surprise given that’s how most relationships with Stellantis went under the previous leadership:
It was so adversarial in the beginning that GAC refused to change the JV name from FCA / GAC to Stellantis GAC, at least not until they received a firm commitment for investment and new products.
The relationship between Stellantis and GAC ended quite publicly when in a turn of events, Tavares announced that Stellantis would raise their ownership stake in the JV from 50% to 75%, but GAC rejected. Eventually the JV filed for bankruptcy and Stellantis decided that they were going to an asset light / import to China strategy – one that was never going to work, but I guess Tavares had had enough of trying to work with GAC.
Tu Le, the writer of the newsletter, points out that Stellantis instead took over its joint venture with China’s Leapmotor, which is probably a good play for the company. Better, though, would have been a deal that maintained Jeep’s strong presence in China.
Now what? Jeep needs help in China, where it’s losing out to vehicles like the Tank 300, and BYD could likely use foreign brands to get around anti-Chinese EV laws and sentiments. Would a Chinese company like BYD buying Jeep (and Chrysler) be a move that benefits both parties? Perhaps, and it’s not entirely an insane idea.
Jeep is a great brand that deserves a great investment, and its recent attempt at shifting itself into Land Rover territory hasn’t worked yet. While a Chinese parent company for such an American brand is a strange thought to consider, what Jeep needs (and Chrysler, too) is new products and new energy.
While President Trump delivered strong anti-Chinese statements during his first term and most recent campaign, he’s open to foreign companies building in the United States. Would Trump’s friend Elon Musk be open to it? That might be a little bit of a harder sell.
Both BYD and Stellantis have already denied they’d merge after reports emerged that BYD officials were visiting facilities in North America. I do think there could be a future in which Stellantis sells off some of its brands and BYD certainly has the cash.
Do I think it’ll happen? Probably not, but the fact that it’s a possibility is a reflection of the situation all Stellantis brands are facing at the moment.
Who Will Be The New Stellantis CEO?
You probably don’t want to be the Stellantis CEO who loses Jeep, especially if you’re a car person [Ed Note: Stellantis selling Jeep alone doesn’t make sense to me. I can absolutely see Stellantis selling off its weaker brands (Maserati/Alfa Romeo), and I could see Stellantis partnering with someone, but if you’re selling Jeep, you’d have to get rid of Ram and Dodge, too, because I don’t know that any of those can stand alone in the U.S.. At that point, Stellantis has become a tiny European company. I dunno about any of this BYD talk, but something is going to have to change for Stellantis, and soon. -DT]. Perhaps the new CEO of Stellantis shouldn’t be a gearhead. That would disqualify our personal favorite pick: Ralph Gilles.
Mark Phelan, over at the Detroit Free Press has a shortlist, and the list matches up with most of the buzz I’ve heard lately. There’s a mix of ex-FCA folks, including former FCA CFO Richard Palmer, ex-Jeep head Mike Manley, and current Jeep CEO Antonio Filosa. Global market head Olivier Francois would be an interesting choice, as would former Ford C-suiter Joe Hinrichs.
Not mentioned in the article is current Renault CEO Luca de Meo, who makes a lot of sense if Stellantis is going to merge with Renault and maybe drop its North American brands.
Ultimately, I agree with Mark’s belief that the first thing a new CEO has to do is care about North America:
The new boss must convince designers and engineers in Auburn Hills that they’re respected and heard. An office visit isn’t enough. The CEO should rough it at a Jeep Easter safari in Moab, or participate in a long engineering development drive.
The nice thing about having an old boss who loved to play bad cop, you automatically start as the good cop.
Stellantis Rejoins European Car Industry Association
In one of his stranger moves, ex-Stellantis CEO Carlos Tavares, pictured above, decided to leave Europe’s main car industry organization, the ACEA, over a disagreement over a proposal to delay EU fines for automakers who didn’t meet carbon reduction targets.
Now that Tavares is gone, Stellantis seems content to rejoin the organization, according to an ACEA press release:
“ACEA welcomes the application from Stellantis to rejoin the association. Given Europe’s unprecedented competitiveness crisis and collective need to master the challenges of the green transformation, it is more important than ever to stand united. ACEA members may be competitors on the market, but they all share the same goal: a competitive and sustainable transition to zero-emission mobility, in a Europe that can stand its ground globally. This we will continue working on with full drive and commitment,” stated Luca de Meo, ACEA President and CEO of Renault Group.
Oh, right, I should mention that the President of the ACEA is also the guy who might take the job Tavares once had. Small world!
What I’m Listening To While Writing TMD
While I am nominally a Houston Texans fan, the Detroit Lions are my favorite NFC team. I should probably adopt a New York football team now that I live here, in the same way I tend to pull for the Mets in the National League. I can’t, though, and New York football teams are too depressing. In honor of the great season the Lions are having here’s a little Bob Seger putting on some “Night Moves.”
The Big Question
Who should buy Jeep? Should Stellantis just keep it?
Photos: Chinese flag sezerozger/depositphotos.com
Chrysler/Jeep sign wolterke/stock.adobe.com
No! Please don’t turn Jeep Chinese…we need all the American brands back and the rest of Stellantis can fuck off and be broken up and go back to their countries of origin
I don’t get what people see in BYD’s cars – judged by their models sold in Europe. The smaller ones are cheap, OK.
I watched the ID Buzz review on the Engineering Explained youtube channel, and it was called mediocre with its 27(?) min. charging time. The BYD Seal and its crossover sibling take something like 38 min. to charge from 10-80% a battery with a capacity of ~80-85 kWh, while they cost the same as an Ioniq 5 or 6, or a Model 3. So how would one describe the Seal?
And I still think Stellantis made a mistake. What FCA has are 10+ years old models from both the Chyrysler and the Fiat side or new models built on even older platfroms, like the Tonale, while PSA (that had been led by Tavares) has new models introduced regularly. I’m afraid, now Stellantis, as a whole will be like FCA has been for the last 1-2 decades, because the FCA-people are getting behind the wheel.
(We still have to see the whole year of 2024, but judged by 2023, the “tiny European company“, the one without the US-related parts, would still be in the top 10 of car manufacturers by revenue, and also by the number of cars made, with a strong presence in South-America and Turkey – if we want to look at what they have outside of Europe.)
BYD needs Jeep in much the same way that the average Autopian needs a colonoscopy with a pineapple.
Jeep as a brand is perhaps thoroughly undesirable to other automakers outside North America given their products are mostly not market suitable and is outsold in many markets by otherwise niche or even premium automakers like Porsche, Land Rover and the like…
Despite which, they are entering the Japanese market with guns blazing. They started selling passenger cars here in 2022 and already have the makings of a national dealer network, about 60 dealers spread across the country, including one in Okinawa.
https://byd.co.jp/e-life/dealer/
They also advertise on TV every night, a series of adverts featuring Masami Nagasawa, the peak of commercial star power.
https://youtu.be/wmrLZn1hr7w?si=MIEdxjtoAJCVMTdM
BYD cars on the road are far from a common sight (i.e. still invisible) but I get the impression that they have seen the half-cock efforts to penetrate Japan of other foreign makers, and have decided to go Too Big To Fail from the word go.
Here’s an unconventional take:
Stellantis sells Jeep to Lucid
(Saudi money, Remember?)
Lucid gets immediate US cashflow for their US operations, while they improve Jeep quality (they know how to do that already – by letting the Jeep engineering team do what they do best, using Saudi money) – as well as a network of dealers who can become Lucid service centers.
The Saudis get Jeeps – including Wagoneers – which are perfect for their desert kingdom.
The rest of the Middle East gets in on the Jeep bandwagon via the Saudi influence. So long Toyota!
Jeep finally gets hybrids that work using Lucid motors.
Meanwhile, Lucid ties up w/ BYD to reintroduce Jeep to the Chinese Market – in exchange, Lucid gets blueprints for small electric cars to be built at Casa Grande for the NA market, and Lucid motors power high-end BYD cars.
The Lucid Gravity becomes the platform for a new Jeep Grand Commander EV for worldwide distribution alongside the Cherokee, Grand Cherokee, Wrangler and Gladiator ICE and Hybrid. The new Lucid midsize becomes the platform for the new Cherokee EV.
can’t wait to see a jeep branded pickup running around the desert with a 50 cal mounted in the back. then you know they’ve made inroads into toyota territory.
If I were the new Stellantis CEO, I’d first see how Morgan Fairchild is doing.
Second, and more seriously, I’d take an axe to a lot of brands both in the US and Europe. The dead European brands walking are Abarth, DS, Lancia, and Vauxhall. The American brands would consolidate under Dodge and Jeep, with Ram merging into Dodge and Chrysler going away after celebrating its 100th birthday next year. I’d sell Alfa Romeo and Opel (no idea who’d buy them, though), and Maserati (to Ferrari). This would reduce my list of brands to Citroen, Dodge, Fiat, Jeep, Leapmotor, and Peugeot.
Afterwards, I would start getting Crazy Go Nuts for badge-engineering, given that the US market won’t likely see any French badges, the European market won’t likely see a Dodge, and many Asian markets already have their own brands to sub in for the US/European offerings. Three European brands, two American brands, and one Asian brand will just have to make do for Stellantis.
GAH IT’S THE APOCALYPSE
Ram and Jeep are the only things left. Chrysler is dead, Dodge has the Hornet which nobody wants and is taking forever on the Charger, which will also be a bit of a loss as they are not offering the EV/Hybrid/ Gas options they need to to make it relevant, and of course nobody wants retro sedans in volume really any more.
Ram doe really need a smaller truck offering, either in the form of a Maverick fighter, or even a rebodied Gladiator, but Jeep would be loath to give up any sales to Ram and I imagine they would see that as competition. Dodge needs a good minivan, cheap but reliable suv like runabouts to survive. I don’t see that happening any time soon.
My dad is looking for a new small truck after a crash in his ridgeline. He asked me about what did Dodge (ram) have for a small truck option. He was shocked they don’t make a dakota or similar anymore. Now, he’s a bit out of touch, it’s been probably close to 20 years, but he would have looked if they had one.
Just throwing this out there for laughs.
Note: this has not been thought out at all, caveats apply.
Roger Penske should buy Jeep, maybe Dodge but still not sure about that part.
Penske is a frickin huge player in the overall auto biz, with hands in everything from NASCAR to god knows what else at this point. As such they seem as qualified as anyone to take a shot at saving a sinking ship.
A fresh perspective could only help at this point.
Yeah, I know. But it could work bigly.
Penske has one foot in the dirt at his age now, but hopefully the machine has been set up to run on a near auto pilot program long ago, within reason.
When it comes to history and Penske, he seems to be able to pull a lot of shit off, rules be damned at times.
I’d probably grudgingly be ok with this happening. He sucks ass as an Indycar owner though.
Hmmm. His IndyCar team is excellent. Do you mean as the owner of the series?
Yeah, as a series owner he sucks. His team is great and the Indy 500 is great but overall the series has been doing a lot of stupid shit lately.
Several of the wealthy retirees on my street give out full candy bars for Halloween. My kids come home with buckets and pockets stuffed full, with like 10-12 full candy bars each. It’s WILD to someone who grew up in a tiny, poor town.
How ’bout this morning’s news?! Tim Kuniskis is back, and Jeff Kommor to head US sales. Team them (and others to be announced) up with Ralph Gilles and get to work fixing things.
“We’re putting the band back together. We’re on a mission from god.”
We’ve got a full tank of gas, a half a pack of cigarettes, it’s dark, and we’re wearing sunglasses: hit it!
-obligatory
I know! I can’t believe these guys haven’t posted it. It was literally the subject of this mornings sales meeting at my store, and we all have a glimmer of hope now lol!
I would look at spinning off Stellantis North America first, give all Stellantis shareholders shares in the new company, then list it on the NYSE so they can cash out easily if they want to
Alternatively, turn it into a joint venture between Stellantis and another company, and BYD would not be a terrible choice for that. Berkshire Hathaway still owns around 5% of BYD, they’re still dumping shares and will probably be totally divested by the middle of next year, but bringing the US brands partially into Warren Buffett’s orbit, even temporarily, wouldn’t be a bad thing, he tends to take a much longer term view than the typical big institutional investors. He was an investor in General Motors for a long time, sniffed around Chrysler a bit when they were getting ready to fully merge into FCA, and has been betting big on the car dealer business currently
“Who should buy Jeep? Should Stellantis just keep it?”
Stellantis should keep it. It’s one of the brands FCA/Stellantis haven’t mismanaged. And it’s one of the key money-makers in the company.
Do you maybe mean it is one of the brands they have mismanaged the least? The move upmarket has been a fail, and QC on the rest of the lineup ain’t what it used to be.
“one of the brands they have mismanaged the least”
Yeah that would be accurate.
If anyone has to buy it: Tata
Tata should be making Defenders in India, with fully floated Dana 44s and Dana 60s depending on the configuration, with properly reliable engines and Transmissions. I genuinely wonder if there is some agreement between Tata and Land Rover that keeps them from producing Defenders in India (not the Pretenders). While I hate the drivetrains of Land Rovers there is an appeal with aluminum bodied 4X4s in humid environments, if the Indians built them right with reliable drivetrains I’m sure they could become a serious Toyota Land Cruiser and Toyota Pickup competitor.
I could see them wanting Jeep as the lower cost, higher volume counterpart to Land Rover and even sharing some components and platforms.
I mean TBH Defenders should have had Dana axles from the factory, some of them have bloke spec licensed Dana 60s in the rear that due to bloke spec have no parts commonality with Dana 60s….
As far as other components are concerned maybe small ones, but Jeep honestly needs to fix their Wranglers. Who’s bright idea was it to make the manual transmission shifter just be a lever connected to the transmission through a bunch of cables? It’s like a bullpup trigger but instead of being used in a platform meant to make things more compact if anything it made things longer than necessary…
Yeah, the Wrangler would remain its own platform in this scenario. But the other models could be fair game for consolidation.
Perhaps.
Because Tata did so well with Jaguar of course.
Honestly I wonder if LR and Jaguar are self sabotage so they can move production to India. If not then Mahindra would be my next choice.
Looks like it’s time for bed Grandpa.
Many LR components like the wiring harnesses are manufactured in India.
Otherwise, there’s no comparable margin from LR product in India that they can extract from their more traditional markets. And there’s no financial advantage to making them there instead of eastern Europe and the UK given its distance from Europe and North America.
I’m talking about the previous generation Defender, which apparently isn’t feasible to keep producing in the UK, but almost certainly it would be in India
If I were the new Stellantis CEO and wanted to exit the North American market here’s my plan:
Now I’m the CEO of GM with the new Jeep brand:
Quality needs to be average to limit warranty claims. Produce and sell solid aftermarket parts that are covered by OEM warranty and can be rolled into the car payment. No CUV’s – people can go next door to the Chevy dealer for those. Turn Toledo into Jeep world like Bowling Green is with Corvettes.
The flaw with your plan is our capitalist world looking for more.
Unless you pursue a strategy of ever increasing revenue, you’ll likely have a shareholder revolt. You also risk alienating a significant customer base into BOF vehicles with less useable interior space and refinement than to which they’re accustomed; this isn’t like Bolinger trying to make a handful of fun offroad vehicles.
This could easily turn into Harley’s ever-present problem of aging buyers without bringing in a stead stream of new buyers – and likely making more money on slapping their logo into things like tshirts than on vehicles.
All of the money from the sales go into shareholder buybacks. The new “lean and mean” Stellantis then merges with Renault to further enhance shareholder synergies.
The problem with your plan for GM owning Jeep is they create internal competition between the Jeep division and the other body-on-frame GM SUVs. It would be a matter of time before they want the Cherokee and Grand Cherokee to be a rebadged Tahoe and Suburban, at which point you have to fit them with the other rebadged Tahoes and Suburbans (Yukon and Escalade) already in the GM lineup.
If GM wants any part of Jeep, it’s for the Wrangler and little else.
In theory there would be little overlap. The Tahoe et al. could continue to be the mostly on road chunky monkeys that they already are.
Limiting cannibalization would take discipline from GM. But you’re right in that a disciplined GM has never really been a thing.
I think you over estimate the general public’s knowledge of the differences. Sure an enthusiast knows the different capabilities of BOF and solid axles for off road but the reality is that for 99% of the buying public the chunky monkey Tahoes/Suburbans are just fine enough. Furthermore, unless your going out on serious trails you don’t need solid axles front/rear and even then the Bronco/4Runner prove that until you get into the VERY extreme cases independent front suspension is perfectly capable and is much nicer to live with on a daily basis.
Colorado/Canyon are coming up into Tacoma Wrangler territory. GM would likely just let Jeep Die if they bought them.
Agreed; see also: Subaru. Like Hardigree pointed out the other day, a slight lift and body cladding convinces enough buyers that it is outdoors-focused and capable. No need to take the penalties associated with BOF when the actual buying public cares little.
But the Cherokee most people think of was unibody and not BOF, and the Grand Cherokee has never been BOF…
This is the opportunity to move the GC to a gin-u-wine BOF. Likely on a shared platform with the Cherokee. The steak is the resulting off road capability and towing capacity. The margin sizzle is the “luxury” component.