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Jeep Compass gears up for the big global drive

Murali Gopalan | Updated on January 15, 2018 Published on November 24, 2016

mike-manley   -  REUTERS

India will be one of its four manufacturing facilities

When Head of Jeep Brand - FCA Global, Mike Manley, referred to the Jeep Compass as a true citizen of the world at the Los Angeles Auto Show last week, he was dead serious. After all, this is truly a global vehicle that will be produced in a handful of facilities and sold in over 100 countries. As the head of the Jeep , Manley knows this is a crucial growth phase for the company where it intends to make a mark in emerging markets.

“This is a very, very special vehicle for us. Not only is it our most global vehicle which will be produced in four plants but it is also opens up a number of the markets where we have not been in,” he told a group of Indian journalists during a select interaction.

Aiming emerging markets

India has pride of place in FCA’s plans since it is one of the four regions that will produce the Compass with the others being China, Brazil and Mexico. The plant in Ranjangaon near Pune will be a vital export hub for right-hand drive markets and its strong localisation programme will pave the way for tremendous cost-efficiencies.

This will be critical for Fiat Chrysler Automobiles as it will bank on the Compass to increase its presence in emerging markets which promise tremendous growth potential but are equally challenging from the viewpoint of costs. The importance of India in this context only assumes greater significance.

“Jeep can do well in India which is a very price-sensitive market but also responds well to new launches and new technologies. In the case of Jeep, the brand is known and we have heritage,” said a confident Manley. The fact that the SUV segment has been the fastest growing in the country will give FCA hope that the Compass can be part of this boom. In the process, it will help turnaround the fortunes of a company which, in its earlier Fiat avatar, has just not been able to get its India story moving ahead.

It was just some months ago that FCA launched the Jeep Wrangler and Grand Cherokee as part of the brand building exercise. Being directly imported vehicles, their price tags were naturally high thanks to the hefty import levies. The Compass, on the contrary, will be heavily localised and FCA will hope to sell it at an aggressive price.

“I am happy with the way the brand has come in a short time in India. We were importing the vehicles and I am quite pleased with the feedback that we have got so far. We will be in good shape for the launch of Compass,” said Manley.

At one level, India also seems in better shape than a host of other markets which are going through their share of economic turmoil. Brazil, in particular, has been enduring some difficult times while Europe has been doing well despite upheavals like Brexit and a rapidly changing political climate. The US is still a strong market but forecast to stay flat while China is back to firing on all cylinders.

Manley said this was also an opportunity for FCA to bring a smaller jeep into markets like India. “We have to make a true Jeep and the smaller we go on platform, the harder the dynamics are. We will need to ensure that is a proper Jeep and not something that is dressed up (as a Jeep). Therefore, we need to be very true to what Jeep stands for,” he explained.

The project is close to being finalised and while India is only too obvious a market, the vehicle has potential in Europe, Brazil and a number of markets. For now, FCA has positioned it “right on top” of the Ford EcoSport while targeting the sub-four metre regulation in India to qualify for lower excise duty. “There are a number of vehicles that will succeed in India so long as they have the right content and therefore I do not see price as a barrier,” said Manley. It is very likely that the smaller Jeep will be launched in India first before heading elsewhere. In the process, Ranjangaon will be an important “contributing hub” to FCA while the technical centre in Chennai will continue as the intellectual base for global projects.

The Ranjangaon plant is part of a joint venture with Tata Motors and Manley hinted that FCA would be open to discussions with its Indian ally about opportunities “where collectively we could win and the market could win”. This could include areas such as engines, transmissions, various components of the platform and so on.

Yet, all this would have to take into account that a Jeep vehicle “has very, very exacting standards”. As Manley reiterated, FCA would be “open to looking at different solutions so long as whatever we make will be true to the brand”. It will be interesting to see how all this pans out considering that Tata Motors and Land Rover would also be exploring synergies in the SUV space.

If everything goes according to the plan, markets in the Asia-Pacific region could end up accounting for even half of FCA’s volumes in the coming years. The Compass will be a key catalyst in setting in motion the rest of the product lineup that will follow. Its manufacturer will be only too aware that it cannot afford any goof-ups especially in countries like India where Fiat is in dire need of a break. It is now up to Jeep to deliver the goods.

The writer was in Los Angeles on an invitation from Fiat Chrysler Automobiles

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Published on November 24, 2016
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