Jeep Ends Its China Venture

By Staff Writer November 03, 2022

Jeep, one of the world's most iconic all-terrain brands, has quietly exited its joint venture in China, the world's largest auto market. 

Stellantis, parent to Jeep and Chrysler, filed for bankruptcy of its China venture on Monday after severing ties over the summer with its Jeep producing partner, the Guangzhou Automobile Group. The bankruptcy is the latest chapter for Jeep, the first foreign auto brand to have invested in China. The original venture between the American Motor Company and Beijing got underway in 1984. It was the first deal for vehicle production in China when it was an almost non-existent market for foreign automakers.

Until recently, to join the Chinese market, foreign automakers had to enter into joint ventures with a local Chinese group, and couldn’t hold more than a 50% stake. For AMC, bought in 1987 by Chrysler (who merged with Daimler Benz in 1998, Fiat in 2014, and then with the PSA group to form Stellantis in 2021), it was the Guangzhou Automobile Group Co, a Chinese state-owned automobile manufacturer. 

The Chinese government lifted these limits on foreign automakers on Jan. 1, 2022, allowing them to fully own their operations in the country. Tesla was the first foreign automaker allowed to sell in China without a joint venture, but certainly will not be the last.

Stellantis, who originally signaled it would increase its share in its joint venture to 75%, then backed out over the summer citing slow negotiations, does not plan on being left out of the world's largest auto market either. 

The automaker in ditching its money-losing venture has planned a future strategy of an "asset-light" approach. The automaker will import Jeeps, especially as it electrifies its lineup, and sell them through Chinese dealers. Stellantis is forecasting $22 billion in net revenue by 2030 from the Chinese market. 

Other major players are shifting strategies in the Chinese market as well, as Beijing’s EV auto mandate begins to take effect in the 2022-23 cycle and requires that a certain percent of all vehicles sold by a manufacturer each year must be battery-powered. 

Honda, the Japanese automaker, has said it would discontinue launches of new internal combustion engine (ICE) vehicles in the Chinese market. China's largest electric vehicle (EV) maker, BYD Co Ltd, said that as of last month it stopped making ICE vehicles and now produces full electric and heavily electrified plug-in hybrid cars only. GM, who sells the #1 car in China, the Wuling Hongguang, plans on building only EVs by 2035 globally. Six automakers - BYD, Volvo, Ford, General Motors, Mercedes-Benz and Jaguar Land Rover - have signed up to a global campaign to phase out ICE vehicles by 2040 and all are focused on the lucrative Chinese market .

Rate this item
(1 Vote)
Last modified on Wednesday, 09 November 2022 13:41