Stellantis kicks off China reboot with push to take over Jeep venture, report says

The automaker is in advanced discussions with state-owned partner Guangzhou on raising its stake in the 50-50 JV. 

Stellantis is poised to roll out a new strategy for China, with the first major step being to take control of its struggling Jeep joint venture from a domestic partner, according to people familiar with the matter.

The automaker formed from the merger between Fiat Chrysler Automobiles and PSA Peugeot Citroën is in advanced discussions with state-owned partner Guangzhou Automobile Group on raising its stake in the 50-50 venture overseeing its Jeep operations in China, said the people, who asked not to be named because the discussions are not public.

The change could take effect as early as 2022, when Chinese rules on JVs are set to be loosened, the people said. In the coming years, Stellantis plans to promote brands including Jeep and DS in the world’s biggest car market, and also push an electric Opel model, one of the people said.

Stellantis is trying to align its production with disappointing levels of demand in China, outlining in a statement last week a plan to integrate Jeep import operations into the JV and centralise production in Changsha. One of the people said the venture’s second plant in Guangdong would be closed.

Representatives for Stellantis and GAC declined to comment on plans for China beyond the statement.

Stellantis CEO Carlos Tavares has for months been promising investors a plan to improve the automaker’s poorl performance in China. Out of the 3.6m vehicles the company sold worldwide in the first half, roughly 50,000 were delivered in China. Its market share in the country slipped to 0.5% compared with double-digit share in all other regions outside Asia.

The venture with GAC produces the Jeep Cherokee, Renegade, Compass and Grand Commander primarily for the Chinese market. Deliveries of locally made models plunged 45% to 44,026 units in 2020, one of the people said.

Stellantis’ plan comes ahead of China lifting a cap on foreign ownership that has for decades limited global automakers’ access to its market. BMW reached an agreement with Brilliance China Automotive Holdings in 2018 to raise its equity in their joint venture to 75% from the current 50%, with the transaction to be completed in 2022.

As part of the Fiat Chrysler-PSA merger, Stellantis also inherited a venture in China with the Dongfeng Motor Group that makes Peugeot and Citroen models. Dongfeng sold some of its stake in Stellantis last week as part of an agreement with PSA Peugeot Citroën reached in December 2019.

Since Stellantis was formed at the start of the year, Tavares has unveiled plans for electrification and pledged more details with regard to the group’s software plans.

In the past few months, Tavares has also said the company was “moving forward very well” on China, and by year-end would have a full strategy including an “innovative” new business model.