Stellantis CEO Carlos Tavares during a press conference at the Stellantis car factory in Hordain, northern France, October 27, 2022.
Samir Al Doumy | AFP | Getty Images
The adventure between Stellantide and Guangzhou Automobile Group producing Jeep vehicles in China are filing for bankruptcy, Stellantis said on Monday, after a long decline for the oldest foreign auto brand in the world’s biggest market.
The European automaker said in a statement that it fully wrote down the value of its investment in the joint venture in its first-half 2022 results.
Stellantis said Canton Automotive Group had also approved the bankruptcy filing and that it would continue to provide service to Jeep customers in China.
The GAC had no immediate comment.
Stellantis ended the venture with Guangzhou Automobile Group in July, just months after announcing it would increase its stake in the company to 75% from 50%.
In the following days, GAC blasted Stellantis, saying it was “deeply shocked” by Stellantis’ critical comments about the end of their China joint venture.
Sales for the company, which sold the Jeep Cherokee SUV and the Compass crossover, have fallen sharply over the past four years. Sales fell 50% in 2021 from the previous year to 20,396 vehicles.
For 2022, it has sold less than 2,000 vehicles. In May, he said he sold only one vehicle.
During the presentation of financial results in July, Stellantis CEO Carlos Tavares said that over the past five years, “political influence” in business relations with its partners in China has increased. He said then that he didn’t see any major long-term impact from the company’s decision to break up the joint venture.
Earlier this month, Tavares said Chinese automakers should face the same tariffs when exporting cars to Europe as European brands exporting to China.
Foreign automakers as a group have come under increasing pressure in China, where the market has rapidly shifted towards battery-electric vehicles and domestic brands have taken market share.
Overseas automakers saw their share of China’s auto market, now the world’s largest, drop 5.5 percentage points last year, to 45.6 percent, according to the China Passenger Car Association.
The joint venture model, which China had insisted on as a condition of investment by foreign automakers, is under threat, said Chee-Kiang Lim, China managing director at Detroit-based consultancy Urban Science.
“The joint venture policy was originally designed to compel foreign brands to share their brands and technology with local Chinese (automakers) in exchange for access to China’s vast and growing auto market,” a- he declared.
Now that Chinese automakers are more “confident that they have closed the gaps with, or even surpassed, their overseas partners,” he said, “we should expect more joint ventures to unravel in the years to come. come”.
The bankruptcy of the Jeep company is the latest chapter in a turbulent history for the first foreign brands to invest in China, when it was an almost non-existent market for global automakers.
The former AMC invested in a Beijing Jeep joint venture in 1984, the first such deal for vehicle production in China by an American brand.
The operation has undergone changes of ownership after the acquisition of AMC by Chrysler, then that of Chrysler by Fiat, which became Stellantis in 2021 after a merger with Peugeot.
Tesla is the only global automaker to have been granted a waiver to produce cars in China without a joint venture.