FCA’s Plan: Make Jeep Its Focus for Growth

Fiat Chrysler Automobiles NV has no interest in selling its Jeep brand but instead aims to more than triple global sales of the unit’s SUVs over the next several years.

The company predicts Jeep sales will climb 30% next year to 2 million units. Annual sales totaled about 300,000 units in 2009, when Fiat SpA took control of the brand.

But analysts are skeptical about CEO Sergio Marchionne’s suggestion four weeks ago that worldwide Jeep sales might eventually reach 7 million units. He figures annual global demand for SUV/crossovers could balloon to 35 million units, with Jeep capturing 20% of the total.

Achieving that volume would require Jeep’s expanding model lineup to outsell FCA’s current global sales—including Jeep—by 50%. At least one model would have to generate at least 1 million sales per year, a target currently achieved only by the Toyota Corolla small car.

Still, many carmakers envy Jeep’s iconic stature and would love to own the brand. Earlier this week China’s Great Wall Motor Co. became the latest carmaker to say so, although it quickly backed away from making a bid.

Analysts and Marchionne agree that selling the unit would leave the remainder of FCA financially weak and unsustainable. Morgan Stanley has valued Jeep alone at $23 billion, or roughly the same as all of FCA.

A more likely scenario for the company would be to sell off its Alfa Romeo and Maserati car brands, along with its Comau (manufacturing equipment), Magnet Marelli (vehicle components) and Teksid (metal castings) units. The combined value of those businesses has been estimated at €12 billion ($14.2 billion).

Selling those operations would help FCA meet its goal of eliminating €4.2 billion ($5 billion) in debt by the end of 2018.