Stellantis to terminate Jeep/GAC joint venture

STELLANTIS has today announced the “orderly termination” of its joint venture with Chinese car-maker GAC, which has been producing Jeep vehicles for domestic sale since 2010.

 

According to a report published in Automotive News Europe (ANE), the decision was made after Stellantis failed in its attempt to take control of the joint venture and comes just four months after Stellantis said it would raise its stake in the business.

 

GAC confirmed via a statement on its website that it and Stellantis were negotiating how to terminate the joint venture after “years of losses”, ANE reported.

 

“We came to the conclusion that it was better to close the joint venture,” a Stellantis spokesperson told ANE, adding that the joint venture had been operating at a loss for some time.

 

ANE reports that with less than a one per cent share of the Chinese new car market, Stellantis has been looking to “reshuffle its strategy… as part of a broader simplification of its global structure under CEO Carlos Tavares”.

 

The GAC joint venture, which has suffered a 50 per cent decline in sales over the past 12 months, closed one factory in March while Dongfeng recently closed two plants citing excess capacity.

 

In its 2030 business plan released in March, Stellantis said it would adopt an “asset light” business model in China where it also has a joint venture with Dongfeng.

 

ANE suggests Stellantis will continue to operate in China via its dealer network.

 

“The Jeep brand will continue to strengthen its product offering in China with an enhanced electrified line-up of imported vehicles,” Stellantis’ spokesperson added.

Stellantis will no doubt want to emulate China’s electric-vehicle makers who have discovered a new fan base: camping enthusiasts who’ve embraced the great outdoors in their own backyard as the nation’s strict Covid Zero measures make international travel off-limits.

 

Stellantis said it aims for annual revenues in China to reach €20 billion ($A29.6b) by the end of the decade, or seven per cent of its expected total revenue. In 2021, Stellantis turned over just €3.9 billion ($A5.8b) in China, India and the Asia Pacific region combined.

 

Locally, Stellantis brands (Abarth, Alfa Romeo, Fiat, Fiat Professional and Jeep) continue to underperform with year-on-year sales of Alfa Romeo, Fiat Professional and Jeep all in decline.

 

VFACTS national sales figures to the end of June 2022 show Alfa Romeo sales fell 3.0 per cent against the previous year with Fiat Professional sales down 33.6 per cent and Jeep sales down by 13.5 per cent.

 

Fiat (passenger vehicle) sales were the only Stellantis brand whose figures were up on those listed for 2021 with a rise of 12.9 per cent.

 

Nationally, Alfa Romeo represents less than 0.1 per cent of the new car market, Fiat and Fiat Professional also listed with a 0.1 per cent share each.

 

Jeep fares somewhat better with a 0.6 per cent share of the Australian new car market.

 

Speaking to GoAuto earlier this year, Jeep said it hopes to boost sales Down Under as it introduces new models including the seven-seat Grand Cherokee L, new five-seat Grand Cherokee and 4xe plug-in hybrid Grand Cherokee over the next 12 months.

 

It is suggested that the new model push will help the American brand to regain important sales ground lost to rivals including Hyundai, Kia, Mazda and Toyota.

 

To the end of June 2022, Jeep has sold just 3435 units nationally, or approximately 10 per cent of its 2014 annual high of 30,408 units.