The Jeep logo at the Paris Auto Show 2022
(Reuters) – The Chinese joint venture between Stellantis and Guangzhou Automobile Group Co (GAC) producing Jeep vehicles will file for bankruptcy, the two groups said on Monday, reflecting the slow decline of the oldest foreign car brand on the first global automotive market and Stellantis’ new strategy in China.
In a statement, Stellantis said it “fully wrote down the value of its investment in the GAC-FCA joint venture” in its first-half 2022 financial results. he would continue to service Chinese customers of the Jeep brand.
GAC, which approved the filing for bankruptcy, said the JV had financial liabilities representing nearly 111 percent of its 7.3 billion yuan ($1 billion) assets.
Stellantis ended the joint venture in July, just months after announcing its intention to increase its stake in it from 50% to 75%.
The two partners had passed the buck of this divorce, the general manager of Stellantis Carlos Tavares believing that GAC had broken the relationship of trust between the two groups while GAC had declared itself “deeply shocked” by these remarks.
In mid-October, at the Paris Motor Show, Carlos Tavares reiterated that it was very difficult today to project oneself into China because of the uncertainties about the country’s relations with the rest of the world.
The manufacturer, born of the merger between PSA and the Italian-American FCA, has not ruled out generalizing an “asset light” model in China, replacing the manufacture of cars in factories held in JV or in its own name by subcontracting or import contracts.
“In order to prepare for this new post-JV step that will allow the Jeep brand to continue to serve its customers in China, a product plan with details of the models available for the Chinese market will be made public soon,” a spokesperson told Reuters. group speech.
Stellantis will import Jeep models for its Chinese dealers as it already does for Maserati and Alfa Romeo.
Unlike other manufacturers such as Volkswagen, which are multiplying investments in China, Stellantis has turned its back on a strategy which, for a time in the past decade, aimed to reach a production capacity of one million cars per year with several brand new factories. .
The geopolitical factor has added to the group’s difficulties in dealing with competition from local brands. The former PSA has thus seen Chinese sales of the Peugeot and Citroën brands plummet for several years in a row, while the JV with GAC, which marketed the Jeep Cherokee and Compass, has followed the same path for the past four years.
Since the start of 2022, the joint venture has sold less than 2,000 cars, compared to 20,396 in 2021 (already down 50%). In May, only one Jeep vehicle found a buyer.
“It had every chance of succeeding in a market that has in turn embraced the fashion for SUVs,” said Bill Russo, who heads Shanghai-based consulting firm Automobility Ltd. “But we cannot manage a business model inherited from the 1980s in the 21st century.”
Carlos Tavares pointed to the growing “political influence” of Chinese authorities in the affairs of joint ventures between Chinese and foreign companies. He is also a strong supporter of reciprocity between customs duties on imports of Chinese cars in Europe and those applied by China on foreign vehicles exported to the Chinese market.
(Juby Babu in Bangalore, Zhang Yan in Shanghai and Norihiko Shirouzu in Beijing, with Giulio Piovaccari in Milan, Kevin Krolicki, and for the French version Gilles Guillaume, edited by Kate Entringer and Matthieu Protard)