The Jeep brand, owned by Fiat Chrysler Automobiles N.V. (FCAU) - Get Report and arguably the automaker's most valuable asset, could fetch tens of billions of dollars if FCA were to sell it to Chinese automaker Great Wall Motor Co., which has expressed interest in buying Jeep.
Ownership of Jeep could vault relative unknown Great Wall to the first ranks of global automakers simply on the strength of Jeep's popularity. FCA acquired Jeep as part of its assumption of the assets of the old Chrysler Corp. following the automaker's 2009 bankruptcy.
Under FCA's stewardship, Jeep sales have increased to about 1.4 million in 2016 from fewer than 500,000 in 2008. Two million Jeep sales are a realistic goal. To the credit of FCA management, the automaker took an attractive brand and invested heavily to make it much stronger with new products such as Jeep Renegade and expanded production capacity, including a new assembly complex in Brazil and one in China. More models are on the way.
What makes Jeep so fascinating to consumers in the U.S. and, increasingly, worldwide? The answer is multifaceted. First of all, Jeep carries with it the heritage of the U.S. military, which 75 years ago developed the vehicle for use in World War II. They were distributed to the British army and to the Soviet Union. Jeep became a symbol of U.S. fighting prowess and later a prop in countless theatrical productions from Jurassic Park to Dukes of Hazzard to Back to the Future.
Later on, outdoorsy-types chose Jeeps to cross rugged terrain whether they be beaches, deserts, mountain passes or jungles. A minority of those who drive the brand today may actually use their vehicles occasionally for the purpose it was originally intended. Most rarely take their Jeeps off road. For the latter, driving a Jeep conveys a fashion statement in the same way that LL Bean hiking boots or a Patagonia rainsuit helps connect a consumer to the outdoors, even if that consumer wouldn't dream of spending a night in a tent.
Best of all, from FCA's perspective, is that Jeep skews toward younger buyers. A 20-something who buys a Wrangler with true off-road capabilities might be inclined toward a more staid Jeep Grand Cherokee once her family starts to grow.
The difficulty for Great Wall is that FCA doesn't want to sell just Jeep, it wants to sell the whole company along with problem brands Dodge and Chrysler. FCA's Ram pickup franchise is valuable; FCA's minivan may be attractive to an automaker like Toyota Motor Corp. (TM) - Get Report , which hasn't given up on minivans as have General Motors Co. (GM) - Get Report or Ford Motor Co. (F) - Get Report .
Closing down or phasing out Dodge or Chrysler will create a host of union and political problems for a new owner. The chance to own Jeep might make it worth the trouble.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.