Stellantis is considering stopping all car production in China after the Jeep exit

Stellantis may stop production of cars in China as geopolitical tensions escalate and Western manufacturers cede market share to domestic players.

The maker of Peugeot and Citroën cars may implement an “asset reduction” strategy for those brands in the world’s biggest car market, CEO Carlos Tavares said on Monday. Earlier this year, he used the same phrase to describe Stellantis’ decision to exit as a single company Jeep plant in the country.

“If we continue with this strategy, which is our strategy at the moment, we will not need factories in China,” Tavares told reporters at Paris Motor Show, adding that the company could instead import cars made in Europe or the US. “I’m not sure they’re indispensable.”

Stellantis is considering a potential exit as better-known foreign car brands struggle to maintain their foothold in the Chinese market, raising questions about their long-term future in the country.

Business for the likes of Stellantis, Volkswagen Group and General Motors Company is becoming an increasingly difficult task as local manufacturers, including BYD Co. and Geely Automobile Holdings Ltd., produce many electric models.

Opel’s Stellantis brand said last month it was suspending planned expansion in China. Jeep’s 12-year joint venture with Guangzhou Automobile Group struggled to gain traction in the country before its parent company announced its withdrawal in July. State-owned GAC Group has slammed its partner’s decision to rely solely on imports after the two sides failed to agree on Stellantis increasing its stake in their joint venture.

Manufacturers are increasingly taking into account what happened with the war in Ukraine, and are wondering whether the ever-expanding list of sanctions against Russia will apply in the same way to China if that country wants to assert itself in Taiwan.

Other automakers are doubling down on China. Germany BMW is moving production of Mini electric hatchbacks from the UK to the eastern province of Jiangsu, and will also assemble the small crossover in the country through a partnership with Great Wall Motor Co.

There is growing concern that Chinese automakers are making inroads into Europe’s already competitive markets. Tavares, who blamed the Stellantis Jeep decision on political interference, said on Monday that European authorities should impose restrictions similar to those faced by foreign automakers in China.