With this bankruptcy, Stellantis definitively turns the page on a part of its Asian strategy
The CHINA joint venture which was created in 2011 by then Stellantis boss, Sergio Marchionne, was to enable the Fiat Chrysler business to conquer the world’s largest automobile market alongside Chinese automotive giant GAC Group (GAC is in Malaysia in partnership with Warisan TC).
At the time, the ambitions were immense, imagine a 17 billion yuan in investment (around 2.3 billion euros), two plants in Guangzhou and Changsha, a capacity of 300,000 vehicles a year, and a range adapted to local tastes, including Jeep Renegade, Compass, Cherokee and the Fiat Viaggio and Ottimo.
Fast forward 11 years where the Changsha Intermediate People’s Court made a ruling, concluding a liquidation process that began in 2022. This bankruptcy stems from a combination of factors, including the venture’s inability to compete in China’s rapidly evolving electric vehicle market and internal conflicts between Stellantis and its Chinese partner, GAC Group.
Declining Sales and Quality Issues:
GAC-FCA, which produced Jeep vehicles in China, faced declining sales and quality issues, particularly with Jeep models, leading to a damaged reputation.
Inability to Adapt to EV Revolution:
The joint venture struggled to adapt to the rapid shift towards electric vehicles in China, where local brands have gained significant market share.
Internal Conflicts:
Stellantis and GAC had disagreements about the direction of the joint venture, including Stellantis’ attempt to increase its stake, which GAC opposed.
Financial Difficulties:
The venture faced significant financial challenges, with liabilities exceeding assets and attempts to stabilize the company through financial support proving insufficient.
Bankruptcy Filing:
The bankruptcy filing officially ends Stellantis’ Jeep operations in China, with the company now focusing on importing Jeep vehicles instead.
Geopolitical Context:
The bankruptcy also highlights the challenges faced by Western automakers in navigating the competitive Chinese market and navigating geopolitical tensions.
Meanwhile, in the past three years, GAC Fiat Chrysler did not find any interested investors. Moreover, five public auctions for its main assets, including land, buildings, and production equipment, were held in the period, but all failed due to a lack of bidders.
One of the reasons for GAC Fiat Chrysler’s difficulties in finding a buyer for its Changsha plant is that it mainly produces fossil fuel vehicles, a business model increasingly out of sync with the fast-growing trend toward new energy vehicles, so any buyer would need to make additional investment to repurpose it.
In the ASEAN market, Stellantis made a bold strong entry a few years ago and today there is no signs of the Jeep Wrangler 4xe.
