Why Did Jeep Fail in China?
A joint venture between Jeep parent company Stellantis and state-owned Guangzhou Automobile Group is closing its only plant in China.
Written by Allison Stone
Reviewed by Kathleen Flear
Jeep
was one of the first international auto brands to set up shop in China. Now, Jeep’s only plant in the world’s largest automotive market
is shutting down for good. As China ramps up its efforts to become more self-sufficient, the Jeep shutdown of its only operating production facility in China serves as a harbinger for other foreign entities looking to break into or sustain their presence in China.
Following the plant closure, Jeep products will be available in China on an import-only basis.
Read along with the car ownership experts at
Jerry
as we dive into Jeep’s history in China, why this is happening now, and what it means for the future. How Jeep came to China
Bloomberg
reported that while the Jeep production facility in China was a joint venture between European automaker Stellantis and state-owned Guangzhou Automobile Group
(also known as GAC Group), Jeep actually first came to China 40 years ago via former owner American Motors. Jeep’s introduction to China was part of a nationwide push to develop the domestic auto industry in China by partnering with more experienced foreign manufacturers.
Not only has China since eclipsed its partners, but in the wake of global unease and supply chain disruptions, Chinese President Xi Jinping is pushing for self-sufficiency.
According to the
South China Morning Post
, Jinping believes that fostering more state-owned business growth and becoming self-sufficient amid commodities shortages will help to further insulate the country from trade-related conflicts. Let Jerry find your price in only 45 seconds
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The end of an era
The joint venture between Stellantis and GAC Group has been ongoing for 12 years now, but the end of this venture culminated from a rift that began a few months ago.
In September of 2021, Stellantis wanted to raise its ownership state in the equal venture, which came as a shock for GAC Group.
Stellantis CEO Carlos Tavares proposed an increase to a 75% state in the company from 50%. Chinese officials refused to sign off, and thus the venture was dissolved.
The termination of the partnership will yield a non-cash impairment charge of approximately $300 million for the first half of 2022.
How other automakers fare in China
Even companies like Volkswagen and General Motors that have historically done better than Stellantis in China are struggling to maintain their current positions.
“You can feel the momentum has shifted in favor of Chinese brands,” said Michael Dunne, CEO of auto industry consultancy company ZoZo Go, to Bloomberg.
It's true—while many Chinese automakers are not well-known in the U.S., they are edging out foreign companies by a big margin domestically, particularly when it comes to the adoption and production of electric vehicles.
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