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Jeep Leaves China After Filing for Bankruptcy

The car brand's parent company cited concerns about profits and policy enacted by the Chinese government

Jeep Leaves China After Filing for Bankruptcy

Jeep has ended its business in China after years of declining sales and political tensions.

The all-terrain vehicles' parent company, Stellantis, had partnered with the Guangzhou Automobile Group to produce several Jeep models in China including the Renegade, the Compass, and the Cherokee. Jeep also sells the Grand Commander, a larger SUV, in China and not the United States.

Shareholders for the joint venture agreed to file for bankruptcy “in a loss-making context.” The partnership had been in place for 12 years. 

“Stellantis fully impaired the value of its investment in the GAC-FCA JV and other related assets in its first half 2022 financial results,” the company noted in its announcement

In June, the European car company had increased its stake in the venture from 50% to 75%. Stellantis then announced in July that it was terminating its partnership with GAC and closing its only factory in China.

Carlos Tavares, the CEO of Stellantis, said that concerns about sales and profit prompted him to end the joint venture, per Motor1. He said importing cars was a more lucrative strategy for his company. The sales of Western-style vehicles have been on the decline in China, reaching only one-fifth of the level recorded in previous years.

Tavares also noted that the state-owned Guangzhou Automobile Group was not meeting the brand’s expectations. 

"We have been seeing over the last few years more and more political interference in the world of business in China,” Tavares said in an interview. "We don't want to be a victim of cross-sanctions as has been the case for other companies in other regions of the world recently.”

The GAC Group issued a statement in response saying multiple Stellantis ventures “failed to achieve success, which is the result of a lack of respect for customers in the Chinese automobile market.”

According to Car Buzz, the Chinese Communist Party’s economic policy favors local car manufacturers over foreign makers. 

China is the largest automobile market in the world and is projected to produce 35 million vehicles domestically by 2025. Cars made in the United States are subject to high tariffs – approximately 15%

In 2021, China was responsible for 32.5% of global vehicle production. The figure has been steadily rising since 2008 when the country produced 13.2% of the world’s vehicles. During the same year, China recorded 26 million vehicles sold. The second greatest number of vehicles purchased was 15.4 million in the U.S.

“Automotive brands and manufacturers with global ambitions therefore cannot do without this market,” reports The Street.

Chinese customers still looking to purchase a Jeep will be able to get imported electric Jeep models through local dealerships. 

All non-domestic car manufacturers are required to enter a joint venture with a Chinese manufacturer to produce cars in China. Tesla is the only car company to be granted an exemption from this requirement.

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