Jeep to ship out of China as Stellantis joint venture to file for bankruptcy

Stellantis will officially exit the world's biggest car market after weeks of speculation and reports of plans to end production in China. Stellantis has been in a joint venture with Guangzhou Automobile Group Co (GAC) to manufacture Jeep vehicles in the country but recent times have seen the going get significantly tougher.

By: HT Auto Desk
| Updated on: 31 Oct 2022, 15:03 PM
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File photo used for representational purpose. (REUTERS)
File photo used for representational purpose. (REUTERS)
File photo used for representational purpose. (REUTERS)
File photo used for representational purpose.

Stellantis had already ended the joint venture with GAC earlier this year after being unable to take a controlling stake. Stellantis CEO Carlos Tavares had even pointed to geo-political tensions as one of the reasons for the prevailing situation. This had prompted a sharp rebuke from GAC which had expressed its ‘deep shock.’ Sales have been in freefall for around four years with models like Cherokee and Compass failing to impress. And while Stellantis is one of the oldest foreign companies to have entered the Chinese market, increasing competition from local manufacturers has been increasing the heat.

For now, Stellantis has informed through a press statement that it would continue to provide service to existing Jeep customers in the country and that Reuters reports that GAC has highlighted the joint venture had liabilities of almost 111% of its assets of 7.3 billion yuan ($1.00 billion) but that the bankruptcy filing from Stellantis won't impact its own operations.

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But while GAC does not see much impact on its own operations, the road ahead isn't quite easy for rivaling foreign brands. The share of foreign auto makers in the Chinese market fell 5.5 percentage points last year, to 45.6%, according to the China Passenger Car Association. The mandatory joint-investment part is cited by many as a stumbling factor in an otherwise fertile playing ground.

First Published Date: 31 Oct 2022, 15:03 PM IST
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