Chrysler announces deal to build Jeeps in China

AUBURN HILLS, Mich. — Fiat and Chrysler Group have reached an agreement to expand passenger car manufacturing and sales in China, officials said Tuesday.

Under the agreement, Guangzhou Automobile Group Co. Ltd. will build one Jeep model in China for Chrysler for sale in China. A specific model was not announced.

Zeng Qinghong, general manager and chief executive of Guangzhou Automobile Group, and Mike Manley, Jeep president and CEO and head of Chrysler's international operations, signed the agreement at Chrysler headquarters here.

In September, Guangzhou began building the Fiat Viaggio in China.

Before the election, GOP presidential nominee Mitt Romney set off controversy with a TV ad that implied Chrysler would move Jeep production to China. At the time, Chrysler officials said they had no intention of shifting production to China but did hope to restart production of Jeeps in China that would be sold there.

The Chinese plant has an initial annual capacity of 140,000 cars and eventually will be capable of assembling 500,000 vehicles a year.

Zeng said the interest among Chinese consumers for Jeeps should increase after Guangzhou begins production. Last year, Jeep sold about 50,000 sport utility vehicles in China.

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"After localization (of production), the demand for Jeep in China will get even more," he said. "So we will work with Chrysler to make these products in China. We are very confident about sales growth."

Zeng said his company should begin production of the Jeep model in 2014.

"Expansion of the agreement with our GAC partners will allow us to unleash the potential of both our Fiat and Chrysler Group brands in China," Manley said in a statement.

Contributing: Martha T. Moore, USA TODAY