Stellantis Aiming At More Control In Joint Venture With GAC, To Help New China Plan:

According to a report in Bloomberg, Stellantis is looking at taking control of its joint venture with Chinese state-owned partner Guangzhou Automobile Group Co. (GAC) to help with its new strategy for the market. The report states the Stellantis is in “advanced discussions” with GAC on raising its ownership in the 50:50 venture, which currently oversees its manufacturing operations for the Jeep® brand in the Chinese market.

China is looking to loosen its rules on joint ventures next year and it looks like Stellantis is looking to capitalize on the decision. Currently, the GAC-FCA joint venture allows for four Jeep products to be produced inside China’s borders. Those four models include the Renegade (BQ), Compass (M4), Cherokee (K4), and the Grand Commander (K8). 

Bloomberg states that Stellantis plans to push its Jeep and DS Automotive brands in the Chinese markets, as well as an electrified Opel model. According to their source, the plans is to integrate Jeep import operations into the joint venture and centralize production at the GAC plant in Changsha. This means that the Changsha Assembly Plant which currently manufacturers the Cherokee and Grand Commander, would adopt the production of the Renegade and Compass as well, leading to the closure of the GAC Guangzhou Assembly Plant.

Both of the former identities of Stellantis, Fiat Chrysler Automobiles (FCA) and Groupe PSA (PSA), have struggled in the Chinese market over the past several years. After Stellantis released its first half of 2021 results, it quickly told investors that out of the 3.6 million vehicles sold globally during the first half of 2021, only around 50,000 units were sold in China. 

Using carsalesbase.com’s data for sales of vehicles sold in China during the first half, the Jeep brand ranked 53th out of the 90 different brands in China. The American adventure brand only sold 12,057 units during that time. It did finish 1 spot ahead of Stellantis’ own Citroën brand which sold 10,475 units. But Jeep wasn’t the best selling Stellantis brand for the Chinese market. Peugeot placed 44th with 26,262 sold. 

But if the Bloomberg report is right and Stellantis is looking to push their DS Automobiles brand in the market, they have a lot of work cut out for them. That brand finished 86th in the ranking with only 446 units sold during the first half. 

Brands like Alfa Romeo were not ranked in the carsalesbase.com numbers, as it does not produce any of its vehicles inside of China.

This means that Stellantis only controls a dismal 0.5% marketshare in the world’s largest and fastest-growing car market.

Since the merger, Stellantis CEO Carlos Tavares has made it no secret that he is taking on the China situation head on. Tavares told the press back in January, he had created a task force to find out “what went wrong” for both FCA and PSA. The task force was to include Stellantis’ top five executives, who would work on solution for the problem with China. 

Stellantis also has a joint venture with Dongfeng Motor Group, in which it manufacturers several Peugeot and Citroën vehicle including the global model of the all-new Citroën C5X wagon. Dongfeng which owned stock in the former Groupe PSA, has had to sell back 10 million common shares at the end of last year before the merger with FCA.

Dongfeng also sold more of its shares this week, as part of the Share Repurchase Agreement with PSA last year. It required that the remaining 20.7 million PSA shares to be sold either to PSA before December 31st, 2020 or to third parties by the end of 2022.

We expect Stellantis to release its new China plan, by the end of this year to help push its brand awareness in the market and please investors.