The Stellantis-GAC joint venture is already bursting at the seams, and now models like the Cherokee and Compass will face a hurdle.

HT Auto Desk

October 31, 2022, 3:03 p.m

File photo used for representational purposes. (REUTERS)

Stellantis will officially leave the world’s largest car market after weeks of speculation and reports of plans to end production in China. Stellantis operates a joint venture with Guangzhou Automobile Group Co (GAC) to manufacture Jeep vehicles in the country, but the situation has recently become much more complicated.

Stellantis already ended its joint venture with GAC earlier this year after failing to obtain a controlling stake. Stellantis CEO Carlos Tavares even pointed to geopolitical tensions as one of the reasons for the situation. This prompted a sharp rebuke from the GAC, which expressed “deep shock”. Sales have been in freefall for about four years, and models like the Cherokee and Compass haven’t impressed. And although Stellantis is one of the oldest foreign companies to enter the Chinese market, increased competition from local manufacturers is increasing the stakes.

For now, Stellantis said in a press statement that it will continue to serve Jeep’s existing customers in the country and that Reuters reports that GAC highlighted that the joint venture has liabilities of nearly 111% of its assets of 7.3 billion yuan ($1 ,00). billion), but Stellantis’ bankruptcy filing will not affect its own operations.

But while GAC doesn’t see much of an impact on its own operations, the road ahead is tough for foreign brand rivals. According to the China Automobile Association, the share of foreign car manufacturers in the Chinese market fell by 5.5 percentage points to 45.6% last year. The mandatory part of co-investment is called by many as a stumbling block in an otherwise fertile ground.

Date of first publication: 31 Oct 2022, 15:03 IST

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