US-European automaker Stellantis said Monday it would halt production of its Jeep SUV in China after failing to acquire a controlling stake in its joint venture with local firm GAC.
GAC-Stellantis is one of two joint ventures in China established by Stellantis, formed in January 2021 through the merger of Fiat-Chrysler and PSA.
“Stellantis intends to work with GAC Group in an orderly resolution of the joint venture formed in March 2010, which has been making losses in recent years,” the group said.
The move was due to a lack of progress on the previously announced plan for Stellantis to take a majority stake in the company.
The decision to depart from GAC would show up as a “non-cash impairment charge of approximately €297 million ($302 million) in the first half of 2022 results,” which is due on July 28.
Stellantis said it will “focus on selling imported vehicles for the Jeep brand in China.”
The group – which also owns the Peugeot, Alfa Romeo and Citroen brands – had hoped to increase its stake in China Guangzhou Automobile Group (GAC) to between 50 and 75 percent.
The move was made possible by a change in Chinese regulations that allows for greater participation from foreign investors, provided they receive Beijing’s approval.
Stellantis told AFP its decision to withdraw “is not linked to any decision by the Chinese government.”
The group announced in January that acquiring the hoped-for majority stake in the joint venture with GAC was the first step in streamlining its activities in the world’s largest vehicle market.
GAC protested at the time because the deal had not been signed.
Jeep, which is rolling out electric vehicles, should be one of Stellantis’ main channels for expansion in China.
The group reported sales of 152 billion euros ($154 billion) in 2021 and aims to reach 200 billion in 2030.
Stellantis’ main activity in China is the manufacture and sale of Peugeots and Citroens through a joint venture with local automaker Dongfeng.
China is also a key market for its luxury brand Maserati and a destination for its premium DS brand.
Jeep sold just 20,000 vehicles in China in 2021, and late last year GAC-Stellantis halted production on one of its two assembly lines.
Jeep is now focused on offering a wider range of imported electric vehicles.
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