While China recovers, U.S. brands still struggle

SHANGHAI — With the coronavirus outbreak largely contained since March in China, the local market for new passenger vehicles and light trucks has sustained growth for five straight months.

But there has been little to celebrate for American brands here. Except for Tesla, demand for U.S.-brand vehicles remains subdued, leaving many of their dealers struggling in the red.

The worst performer among them is Jeep. While China’s overall market has returned to growth mode, Jeep sales are stuck in a downward spiral that began in 2018.

FCA Group now produces vehicles for only the Jeep brand in China. It assembles the gasoline and plug-in hybrid variants of the Grand Commander as well as the gasoline models of the Renegade, Compass and Cherokee at its joint venture with GAC Motor Co.

In September, Jeep sales fell 36 percent from a year earlier to 3,862, with year-to-date volume plummeting 47 percent to 27,675, according to GAC.

That’s in stark contrast to the performance of the overall market. New light-vehicle sales across China rose 8 percent last month, with the decline for the pandemic-fraught first nine months of this year narrowed to 12 percent.

Jeep’s troubles date back to 2015, when FCA launched local production but failed to keep product quality under control, according to John Zeng, Asia director of LMC Automotive in Shanghai.

Local production allowed FCA to sell Jeep models at much lower prices than imports, which were subject to a hefty 25 percent tariff in China. As a result, Jeep demand started to take off.

In 2017, Jeep sales exceeded 200,000, more than doubling the volume in 2014.

“As Jeep’s sales surged, customer complaints multiplied about its product quality problems,” Zeng said.

In September 2018, a group of Jeep owners complained on state-run China Central Television about the problems of excessive engine oil burning and sudden loss of power with models such as the new Cherokee and Compass.

Additional reports surfaced in Chinese press and social media about problems ranging from abnormal noises with transmissions to poor quality of exterior components, such as windshields and sunroofs.

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