Fiat, Chrysler and Guangzhou Automobile (GAC) have signed a framework agreement to expand passenger car manufacturing and sales in China, the three automakers announced last night. 

The agreement was signed at Chrysler headquarters in Auburn Hills, Michigan, by Zeng Qinghong, general manager of GAC Group, and Mike Manley, Fiat’s chief operating officer (COO) for the Asia Pacific (APAC) region, who is also president and CEO of Jeep.

According to the framework, the joint venture between GAC, Fiat and Chrysler Group International, which currently manufactures the Fiat Viaggio and distributes imported models such as the Fiat 500 and Bravo and the Chrysler-built, Dodge Journey-based Fiat Freemont in China, will expand operations to add more Fiat models, and, later, Jeep for Chinese sales only.

This would resume Jeep output in China which dates back to the mid-1980s and ended several years ago after Daimler and Chrysler split.

“Following the successful launch of the first product of our JV, the Viaggio launched last September, this agreement is another milestone of our partnership with Fiat and Chrysler Group. It definitely creates the basis for our JV to reach very ambitious objectives in Chinese market,” said Zeng. 

“2012 was a fruitful year for us. In China, we’ve gained very positive feedback about the Viaggio. At the same time, Jeep set an all-time sales record both in China and worldwide, which we are proud of,” said Manley.

“The 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.”

“We have had some very fruitful discussions with Fiat’s partner,” Manley told the Detroit Free Press at the North American International Auto Show ahead of the official announcement.

He said it could take up to two years before actual production would begin and declined to say which Jeep models would be built in China.

Last October, Chrysler ‘clarified’ its position on the possible transfer of Jeep output for China to that country after some earlier reports led to misleading claims in the media it was planning to shift all Jeep production to China. It insisted Jeep was “simply reviewing the opportunities to return Jeep output to China for the world’s largest auto market”.

However, the misleading claims were picked up by the Romney presidential campaign, leading to a furious response from the United Auto Workers (UAW) union.

In a blog, a Chrysler official cited a Bloomberg News report titled ‘Fiat Says Jeep Output May Return to China as Demand Rises’ which stated “Chrysler currently builds all Jeep SUV models at plants in Michigan, Illinois and Ohio.

“[Manley] referred to adding Jeep production sites rather than shifting output from North America to China,” the official added.

The announcement in Detroit last night again became a political football, the ‘Freep‘ reported, and had generated tweets from Donald Trump saying: “I told you so,” and other chatter on blogs and social media.

Manley said the agreement allows Jeep to add production in China so that it can sell SUVs in China and doesn’t eliminate any jobs in the US.

Chrysler has added or plans to add a total of more than 4,000 workers at US. plants to make Jeeps between last summer and next fall, but that hasn’t quelled the debate, the paper said.

“I am not entirely sure what causes the confusion on this point,” Manley said.

The Free Press said the Guangzhou plant has initial annual capacity of 140,000 cars and is capable of eventually assembling 500,000 vehicles per year. Production of the Viaggio began in June.

In 2009, Chrysler and Fiat CEO Sergio Marchionne identified Jeep and Alfa Romeo as the two brands with global potential for the combined Fiat-Chrysler and set a goal for Jeep to reach annual sales of 800,000 by 2014, the paper noted.

Fiat and Chrysler also plan to build a subcompact Jeep SUV at Fiat’s Melfi, Italy, plant and will export it to North America and other markets. Marchionne told the Free Press the subcompact Jeep SUV would go on sale in 2014.

In a western-Sino joint venture established about the same time as Volkswagen’s first alliance in China, Jeep, then owned by American Motors, first put vehicles into production in China in 1985, after several years of negotiations between the US firm and Chinese automakers and government authorities.

Beijing Jeep Corporation had become China’s first Sino-western automotive joint venture when established in 1984. Early model lines included the compact (by US SUV standards) Cherokee and, later, the larger Grand Cherokee.

Almost six years after talks on the joint venture had begun, the first Cherokee rolled off the assembly line on 26 September 1985. Assembly of the Cherokee continued after Chrysler’s buyout of American Motors as did production of Beijing BJ212-based SUVs.

Some Chrysler models were subsequently added to the Chinese company’s product line including the Jeep Grand Cherokee, Mitsubishi Pajero [Shogun] Sport, and Mitsubishi Outlander. Chrysler left the joint venture in early 2009.

During Chrysler’s short-lived partnership with Daimler, parent of Mercedes-Benz Cars, it was decided that the American company’s Chinese joint venture would produce Mercedes-Benz-branded products. Beijing Jeep became Beijing Benz-DaimlerChrysler Automotive with the then German chancellor Gerhard Schroeder a guest at the 2004 naming ceremony. While Chrysler was removed from the company in 2009, it remained in its legal name for several more years.