BEIJING (AFP) – Great Wall Motor Company, China’s seventh-largest carmaker, specialises in urban SUVs and wants to move upmarket — which could explain its apparent interest in the Jeep brand.
Great Wall confirmed on Monday its interest in buying all or part of the Italian-American group Fiat Chrysler (FCA).
According to the US publication Automotive News, the Chinese firm is specifically eyeing the Jeep brand.
Great Wall, founded in 1984 and based in Hebei province close to Beijing, has built a reputation in urban sport utility vehicles and these now account for 80 percent of its production.
In a highly competitive Chinese automotive market, Great Wall sold 1.07 million vehicles last year, up 26 percent from the previous year.
Urban SUVs are highly popular among Chinese drivers who want to feel safe in cities where road accidents are commonplace. Sales of SUVs of all brands jumped by 45 per cent last year to 9.05 million units, according to the China Association of Automobile Manufacturers.
It is in this market that 100 percent Chinese-owned brands like Great Wall are gaining momentum: they accounted for about 60 percent of sales of SUVs in the country in 2016.
But the group faces rising competition in the sector, which may cut into its profit margins. According to analyst estimates compiled by Bloomberg, Great Wall will likely report a plunge of almost 80 percent in net income in the second quarter of 2017.
Under these conditions, the manufacturer is openly seeking to upgrade to more expensive and more profitable vehicles.
This ambition could favour the acquisition of Jeep, a premium brand long renowned for its quality in China.