Stellantis’ Jeep joint venture in China to file for bankruptcy
The venture between Stellantis and Guangzhou Automobile Group producing Jeep vehicles in China is filing for bankruptcy, Stellantis said on Monday, after a lengthy decline for the oldest foreign auto brand in the world’s largest market.
The European carmaker said in a statement it had fully impaired the value of its investment in the joint venture in its results for the fist half of 2022, adding that it will continue to provide services to existing and future Jeep brand customers in China.
Stellantis had terminated the venture with Guangzhou Automobile Group Co (GAC) in July, only months after it said it would raise its stake in the business to 75 percent from 50 percent.
In the following days, GAC hit out at Stellantis, saying that it was “deeply shocked” by critical comments from Stellantis about the end of their joint venture in China.
Sales for the joint venture, which sold the Jeep Cherokee SUV and the Compass crossover, have been in sharp decline for the past four years. Sales fell by 50 percent in 2021 from the previous year to 20,396 vehicles.
For 2022, it sold less than 2,000 vehicles. In May, it reported selling only a single vehicle.
While reporting financial results in July, Stellantis Chief Executive Officer Carlos Tavares said over the last five years “the political influence” in doing business with its partners in China was growing by the day. He also added that he did not see a major long-term impact from the company’s decision to break the joint venture with GAC.
Earlier this month, Tavares said Chinese automakers should be subject to the same tariffs when exporting cars to Europe as European brands face when exporting to China.
Foreign automakers as a group have been under growing pressure in China, where the market has shifted quickly to battery-electric vehicles and domestic brands have been taking market share.
Foreign automakers saw their share of China’s auto market, now the world’s largest, drop by 5.5 percentage points last year, to 45.6 percent, according to the China Passenger Car Association.
The bankruptcy at Jeep is the latest chapter in a turbulent history for one of the first foreign brands to have invested 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 joint venture deal for vehicle production in China by an American brand.
The operation went through ownership changes after AMC was acquired by Chrysler and then Chrysler was acquired by Fiat, which became Stellantis in 2021 after a merger with Peugeot.
