Following the news that global automaker Stelantis would be ending its joint venture with Guangzhou Automobile Group (GAC) to produce Jeep, the Chinese automaker has applauded. More specifically, GAC has told Stelantis CEO Carlos Tavares about his recent comments about the failed joint venture and the “broken trust” between the two partners.
Stellantis ($STLA) is a top-ten global automotive manufacturer and the current iteration of Fiat Chrysler Automobiles (FCA), following a merger with Peugeot SA, which was finalized in early 2021. Prior to that merger, FCA had signed a joint venture with the Chinese manufacturer. The GAC Group will manufacture its vehicles overseas, including Jeep, for its local markets.
Although GAC Group is a top five automotive manufacturer in China, its joint venture with Stelantis has struggled in recent years, a fact neither party is denying. This “lack of progress” was the initial rationale behind Stelantis’ announcement last month that it was ending its joint venture with GAC Group in favor of imports, thus halting Chinese Jeep production:
Due to a lack of progress in a previously announced plan for Stelantis to take a majority share of the GAC-Stellantis joint venture, Stelantis NV today announced its plans to focus on delivering imported vehicles for the Jeep brand in China, in order to take advantage of the potential. The brand and its iconic products through an asset-light approach.
In January, Stelantis tried to increase its stake in the joint venture from 50% to 75%, which was only hindered by GAC. At the time of the announcement of Stelantis’ termination, we reported the GAC’s surprise by Stelantis’ comments, rebutting the public statement, with the reply that no formal agreement had been signed, criticizing Stelantis for saying otherwise. Happened.
Taunts over Chinese manufacturing of Jeeps continue, but GAC Group is the latest to publicly condemn its lame duck business partner, separates Stelantis CEO Carlos Tavares.
Fingers continue to be pointed at failed Chinese Jeep production, according to the most recent chapter reported by Automotive News Europe, Stelantis CEO Carlos Tavares during an earnings presentation last week cited politicians’ increased exposure to the automotive businesses in China, the report said.
While Tavares acknowledged the declining volume of Jeep sales in the Chinese market as an argument for Stellantis’ JV termination, he expanded on saying that the decision was also rooted in “broken trust” with the GAC Group, as well as Blaming the Chinese policy that favors local auto brands.
In addition, the CEO said that while Stelantis had signed an agreement to increase its stake in the GAC joint venture, GAC Group “did not do what it should have done.” The GAC group has publicly responded to Tavares’ comments, calling them “unreliable”.
According to a statement made by GAC Group, several vehicles in the Stelantis venture “failed to achieve success, which is the result of a lack of respect for customers in the Chinese automobile market.”
Additionally, GAC stated that its joint venture with Stelantis “has not been able to establish a mutually trustworthy operating mechanism adapted to the highly competitive environment in China to turn a blind eye to the continuing losses in recent years.”
In reference to the failed acquisition by Stelantis earlier this year, GAC said it refrained from doing any formal paperwork because “there was no agreement on the relevant agreements.” Instead, the GAC group stated that it was Stelantis which was the party that was not fulfilling its commitments. tag you’re it.
No matter who is at fault, this joint venture doesn’t seem salvageable, and the Chinese-made Jeeps will be discontinued. Going forward, Stelantis plans to import electrified versions of its Jeep models for sale in China. We’ll see if they can find any success in doing it alone.
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