Why Is Automotive Giant Stellantis Leaving China

Did you know that Stellantis is exiting China? This is happening primarily due to persistent financial losses and a breakdown of trust with its local GAC partner, exacerbated by the rapid shift to electric vehicles (EVs), fierce competition from domestic brands, and alleged Chinese government support for local companies.

After failing to secure investment for its failing joint venture, Stellantis has filed for bankruptcy and is focusing on importing vehicles rather than local manufacturing, though the broader context involves increased geopolitical tension and China’s dominance in the EV sector.

Reasons for the China exit

Financial Losses and Bankruptcy: The joint venture struggled with mounting debts and losses, leading to a bankruptcy filing by Stellantis in China.

Loss of Trust: CEO Carlos Tavares cited “broken trust” with GAC, stating the partner failed to fulfill its obligations after Stellantis attempted to increase its stake in the venture.

Market Shift to EVs: The rapid transition to electric vehicles (EVs) in China was a challenge, as Stellantis’ Jeep joint venture lagged in adapting and faced significant competition from local EV brands that have captured a dominant market share.

GAC’s Stance: GAC Group opposed Stellantis’s attempts to raise its stake and ultimately blasted Stellantis for its lack of respect for the Chinese market. (GAC is in Malaysia in partnership with Warisan TC).

Geopolitical Tensions: Stellantis’ exit also highlights challenges faced by Western automakers due to geopolitical tensions and alleged state support for Chinese domestic companies, which creates an uneven playing field.

What Happens Next For Stellantis

Asset-Light Strategy: Stellantis is shifting to an “asset-light” strategy in China, which involves importing electrified Jeep and Maserati vehicles into the country.

Focus on Imports: Instead of local manufacturing, Stellantis will focus on importing Jeep vehicles, though the company is reassessing its sales targets for China.

Broader Industry Context: The situation reflects a broader trend of foreign automakers struggling in China’s competitive and rapidly evolving EV market.

The bankruptcy of the GAC Stellantis joint venture officially ends local production and highlights Stellantis’s decision to shift its focus away from the challenges of its Chinese manufacturing operations

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.