Stellantis To End Partnership With GAC

Stellantis will discontinue Jeep production in China after failing to gain control of the GAC joint venture. Daniel Ren reported for the South China Morning Post (SCMP) on July 19, 2022 that the 12-year-old loss-making GAC Fiat Chrysler joint venture sold only 20,000 units last year, accounting for barely 6% of its annual capacity.

Photo Insert: Stellantis made the decision to halt Jeep production in China, which will result in a non-cash impairment charge of €297 million ($301 million), after failing to acquire a majority ownership in GAC Fiat Chrysler.

Stellantis' new strategy will instead focus on selling its imported line-up of electric vehicles in China. Stellantis, previously Fiat Chrysler, has agreed to end an unprofitable joint venture with GAC Group in the face of intense competition in the world's largest automobile market.

Stellantis made the decision, which will result in a non-cash impairment charge of €297 million ($301 million), after failing to acquire a majority ownership in GAC Fiat Chrysler. It also marks a shift in Stellantis' China strategy, with the company focusing on electric vehicles (EV) in the mainland, where sales are quickly increasing.

"The Jeep brand will continue to strengthen its product offering in China with an enhanced electrified line-up of imported vehicles meant to exceed Chinese customer expectations," Stellantis said in a statement on Monday, adding that the decision to end the venture with Guangzhou-based GAC was consistent with the company's asset-light strategy.

The venture, launched in March 2010, has been losing money in recent years, and Stellantis said the two partners will implement an "orderly termination." GAC Fiat Chrysler delivered 20,000 units in 2021, a 50% decrease from the previous year. The volume of deliveries accounted for only 6% of its annual capacity.

Stellantis, the world's fifth-largest manufacturer by sales, revealed in January that it planned to increase its investment in GAC Fiat Chrysler to 75% from 50%. According to the business, its attempt to acquire control of the enterprise was thwarted by "a lack of progress."

Other automakers, including BMW and Volkswagen, have increased their stakes in joint ventures with Chinese partners in recent years, as Beijing relaxed restrictions on foreign ownership in the auto industry.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic