Stellantis says Jeep joint venture in China will file for bankruptcy

Oct 31 (Reuters) – The joint venture between Stellantis and Guangzhou Automobile Group producing Jeep vehicles in China is filing for bankruptcy, Stellantis said on Monday, after a long decline for the oldest foreign car brand in the biggest market of the world.

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, adding that it would continue to provide services to existing and future Jeep brand customers in China.

Stellantis had terminated the business with Guangzhou Automobile Group Co (GAC) (601238.SS) in July, just months after announcing he would increase his stake in the company to 75% from 50%. Read more

In the following days, GAC attacked Stellantis, saying it was “deeply shocked” by Stellantis’ critical comments about the end of their joint venture in China. Read more

Sales of the joint venture, which sold the Jeep Cherokee SUV and the Compass crossover, have been falling sharply for 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.

When releasing 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 day by day. . He also added that he doesn’t see any major long-term impact from the company’s decision to sever the joint venture with GAC.

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.

Foreign automakers have seen their share of China’s auto market, now the biggest in the worlddown 5.5 percentage points from last year, to 45.6%according to the China Passenger Car Association.

Jeep’s bankruptcy is the latest chapter in a turbulent history for one of 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 joint venture 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.

Reporting by Juby Babu in Bengaluru and Zhang Yan in Shanghai; written by Kevin Krolicki; edited by Rashmi Aich and Stephen Coates

Our standards: The Thomson Reuters Trust Principles.

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