The Great Wall has publicly shown his love for the FCA but it has encountered the "cold face"

On August 14, the "Car News" of the United States burst out of Chinese car companies to acquire Fiat Chrysler Motors (FCA). The news sparked a wave of turmoil in the global automotive industry. The denial of related car companies has caused the curiosity of industry professionals. After a full week, finally, the Great Wall made it clear that it intended to acquire.

In an e-mail to the "Automotive News" of the United States, Wang Fengying, president of Great Wall Motor Co., Ltd., made it clear that the Great Wall has plans to acquire Jeep, and has begun to contact the FCA in the hope of opening the acquisition negotiations. Great Wall Motor spokesman Xu Hui later added that the Great Wall has indirectly expressed interest in Jeep, but has not yet issued a formal offer for an offer, nor has it officially met with the FCA board of directors. However, the FCA issued a statement on the news, saying that it did not contact Great Wall Motor on the sale of the Jeep brand or other related matters. The company is currently busy with its five-year (2014-2018) business plan.

It's not surprising to want to buy Jeep

The United States "Car News" said that the plan for Great Wall Motor's acquisition of Jeep is not surprising at all. The media said that Jeep may be the only FCA brand that can attract buyers, and its charm has long been confirmed. As early as 1987, Chrysler took a fancy to the Jeep brand and acquired it from the American Automobile Corporation (AMC). In the past decade, General Motors has at least three attempts to establish a partnership with Jeep.

The media quoted analysts inside the industry as saying that Jeep is undoubtedly the most valuable brand under the FCA. In theory, the individual selling price of the Jeep brand may be higher than the selling price of the entire FCA. Adam Jonas, an analyst at Morgan Stanley, quantified the value of the brand and its status in the FCA. Jonas said that as far as the Jeep brand itself is concerned, its share price is approximately US$17.2 per share, while the FCA share price including Jeep is approximately US$16.4 per share. Based on the above prices, the Jeep brand price is about 33.5 billion U.S. dollars (about 223.5 billion yuan), while the FCA price is slightly lower at 32 billion U.S. dollars (about 213.48 billion yuan).

However, it is precisely this high market value of the Jeep brand that has brought a significant impediment to Great Wall Motors. In 2016, Great Wall Motor’s operating income equivalent to USD was only 14.76 billion, while the FCA was as high as US$131 billion. As for the issue of funds, Great Wall is confident that it can raise funds and realize acquisitions. Xu Hui pointed out that "the Great Wall has a good profit record. We have already listed in Hong Kong and Shanghai. We can not only use our accumulated profits, but also use our channels in the basic market to facilitate acquisitions."

Great Wall to be the World's Largest SUV Manufacturer

In 2016, Great Wall Motor sold 1,074,471 vehicles, including 938,018 SUVs. However, according to the original plan of Great Wall Motor, regardless of the cooperation with Hebei Yu Jie, by 2020, Great Wall plans to break the annual sales of 2 million, becoming the world's largest professional SUV brand. Xu Hui reiterated this ambition in an interview. "Our strategic goal is to become the world's largest SUV manufacturer."

However, if calculated according to this goal, the annual compound annual growth rate of sales of Great Wall Motors needs to reach at least 20%. If you can cooperate with the world’s largest SUV brand, the Great Wall’s aspiration can be achieved easily. Xu Hui also pointed out: "Comparing with our own brand, we will acquire Jeep, a global SUV brand, and we will achieve our goals faster and better."

According to the "Automotive News" data of the United States, thanks to the growing product line and production bases in Latin America, Asia and Europe, the Jeep brand sold a total of 1.41 million vehicles worldwide in 2016. About one-third of sales come from markets outside of North America, such as Brazil, India, and China, and they hope to reach 2 million vehicles worldwide by 2018. The goal set by both companies is 2 million vehicles. Once the Great Wall has successfully acquired Jeep, the annual sales volume can not only achieve the set target, but it may even double.

However, not only Wei Jianjun is optimistic about the SUV market, but also the CEO of FCA Malchone. Last month, in a conference call with analysts, Malchonet said that given the current market demand, the global SUV market may reach annual sales of 33 million to 35 million vehicles. Malchone expressed with confidence that "if a brand can occupy one-fifth of the global market share, it must be Jeep." According to Malchone's statement, once it achieves this goal, its global annual sales volume is about About 7 million vehicles. So, by contrast, 2 million of Great Wall Motors is a small target. Therefore, whether Jeep will sell it to the Great Wall can only wait and see.

Acquisition or provision of internationalization fulcrum

In the list of potential buyers given by the "Auto News" of the United States, the internationalization of Great Wall Motors seems to be weaker. Dongfeng Motor has successfully invested in PSA. Geely owns overseas brands such as Volvo and Proton. GAC is also a Jeep brand-made cooperative vehicle company. Therefore, the internationalization of the Great Wall seems to be the most urgent.

At present, Great Wall Motor has an R&D center in Los Angeles. In addition, due to concerns that US President Trump may formulate a more stringent trade policy, the Great Wall said he is considering establishing a factory in Mexico. Great Wall hopes to eventually sell the Haval SUV in the United States, and pointed out that the production of vehicles in the United States can avoid trade risks. Xu Hui revealed that Great Wall hopes to use the R&D center set up in Detroit this year to learn more about the U.S. market. Jeep’s mature distribution network and experience in North America will also provide the fulcrum for the internationalization of the Great Wall.

Among the four Chinese car companies provided by foreign media, Dongfeng, Geely and Guangzhou Automobile have successively denied plans to acquire the FCA after the news came out. As the first Chinese car company to show love to the FCA, although the FCA has not dealt with the "cold" treatment, whether the Great Wall can obtain the heart of the king is still a lot of variables. Regarding the latest developments in the incident and the views of various parties, Gasgoo will continue to pay attention.