It’s one that ends in general anonymity.
Jeep, the automotive industry’s iconic off-road logo, has just quietly left one of the top auto markets: China.
The Asian giant is the world’s largest car market competing with the United States. Car brands and brands with global ambitions dispense with this market.
But emerging tensions between Washington and Beijing have made the business climate even more complicated for Western corporations in China. In the past, in order to enter the Chinese market, foreign car brands were forced to marry a local organization by creating a joint venture.
With the exception of Tesla (TSLA), almost all Western car brands have complied with this requirement of the Chinese authorities, a sine qua non condition to take over the juicy market.
off-road
This has allowed the Chinese automotive industry to take advantage of significant knowledge to the point that we have witnessed the rise of formidable Chinese automakers. Today, for example, China’s BYD is Tesla’s main competitor in the electric vehicle segment. The company is the only automaker that can produce more than a million blank cars this year outside of Tesla.
The deteriorating relationship between Beijing and Washington is pushing Western teams to reconsider their operations in China.
China’s zero-covid policy is also a major headache for multinational chains.
Stellantis (STLA), the parent company of Jeep and Chrysler, thinks that’s a lot. The corporation will withdraw Jeep from China to put an end to all those demanding situations that have become big problems. In a statement, Stellantis explains that the joint venture formed with the Chinese company Guandgzhou has filed for bankruptcy.
GAC-FCA, the call of this corporate that produced and delivered Jeep cars in the country.
“The shareholders of the GAC-FCA joint venture, Guangzhou Automobile Group Co. , Ltd. and Stellantis N. V. , approved a solution that authorizes the joint venture to file for bankruptcy, in an environment of losses,” said Stellantis.
He added: “Stellantis has completely affected the monetary effects of its investment in the GAC-FCA joint venture and other similar assets for the first part of 2022. “
Going forward, the company will continue to supply existing and long-term Jeep consumers in the country.
The move reflects the brand’s slow decline in the world’s largest auto market and Stellantis’ new strategy in China. It is part of CEO Carlos Tavares’ preference to resize the company in this market, where he considers operational situations complicated for Western companies.
GAC, which approved the bankruptcy filing, said the joint venture has monetary liabilities amounting to nearly 111 percent of its 7. 3 billion yuan ($1 billion) assets.
Stellantis had rescinded the joint venture in July, just months after announcing plans to increase its stake in it from 50% to 75%.
Both partners blamed each other for this failure. Tavares accused GAC of breaking the acceptance date between the two teams, while GAC said it was “deeply shocked” by those comments.
Stellantis does rule out generalizing an “asset light” style in China, replacing car manufacturing in JV-owned factories or in its own call through subcontracting or import contracts.
The automaker will import Jeep models for its Chinese as it already does for Maserati and Alfa Romeo.
Stellantis was born from the merger between the French Peugeot PSA and the Italian-American Fiat Chrysler, or FCA Automobiles.