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GAC-Stellantis China JV Files for Bankruptcy – Report

A joint venture that makes Jeep in China will file for bankruptcy, joint venture partners Sterantis and Guangzhou Automobile Group (GAC) said on Monday.

A Reuters report said the move would boost its stake from 50% to 75%, just months after Stellantis made a surprise decision to end its joint venture with GAC in July. It is said that it was done later.

The news outlet noted that Stellantis CEO Carlos Tavares at the time accused him of gaining “political clout” by doing business with Chinese partners, and the GAC was “deeply shocked” by Stellantis’ decision. I received it,” he said.

Stellantis has since said it will pursue an import-based business model in China, which means more tariffs, but said it would not have a significant long-term impact from breaking up with the GAC.

Tavares said earlier this month that a similar strategy could be followed for Peugeot and Citroen, the other brands Stellatis sells in China.

GAC Ventures, which sold the Jeep Cherokee SUV and Compass crossover, has seen a sharp drop in sales over the past four years, plunging 50% to 20,396 units in 2021, according to the report.

Less than 2,000 units will be sold in 2022, and only 1 unit was sold in May.

Reuters said Stellantis’ U-turn left a question mark on its ability to succeed in China.

“No global car company can’t afford not to enter the world’s largest car market,” the news agency said in late 2020, just before the merger of Fiat Chrysler, the creator of Stellantis, and PSA was completed. I quoted

According to the report, the group will grow its sales in China to €20 billion (US$19.8 billion) by 2030, up from a combined €3.9 billion in China, India and Asia-Pacific in 2021. ) is aimed at reaching

Former Chrysler executive Bill Russo, head of Shanghai-based consultancy Automobility, told Reuters the Jeep venture had failed to keep up with changes in the Chinese market.

“We were well entitled to success in a market that embraced sport utility vehicles,” he was quoted as saying. “But you can’t run the 1980s. [when the original Chinese Jeep JV began operations – ed] A business model for the arrival of the 21st century. ”

According to Reuters, Stellantis said on Monday that it had completely devalued its investment in the GAC venture with its first-half results.

GAC, which has approved a bankruptcy filing, said the venture company owed nearly 111% of its 7.3 billion yuan ($1 billion) assets. The bankruptcy will not have a material impact on its business, according to the report, the company added.

Tavares earlier this month criticized both the European car market and Beijing’s commercial policies, saying that in contrast to the more cautious stance of the West, Chinese automakers have been slow to export cars to Europe, according to Reuters. said that European brands should be subject to the same tariffs they face exporting to China.

Foreign automakers were under increasing pressure in China, where the market is rapidly shifting to battery electric vehicles and domestic brands are gaining market share. to the China Passenger Car Association.

Qi Qian Lim, managing director of China at Detroit-based consultancy Urban Science, told Reuters that China is seeking to ensure that foreign brands share technology with domestic automakers. He said the alleged joint venture model was under threat.

Chinese automakers are “confident that they have closed or surpassed the gap with their foreign partners,” so they “should expect more JVs to dissolve in the next few years.” No,” he added.

Reuters said the bankruptcy was the latest chapter in the tumultuous history of the Jeep brand in China. The former American Motors Corporation (AMC) invested in a Beijing Jeep joint venture in 1984. This is the first deal for auto production in China by an American brand. It then changed ownership after AMC was acquired by Chrysler. [then the short-lived DaimlerChrysler merger era ed] Chrysler was then acquired by Fiat, which merged with PSA in 2021 to form Sterantis.

Reuters said Tesla was the only global automaker to give up its right to build cars in China without a joint venture.

from just auto record: FCA and BAIC talk about China JV – report

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