BERLIN -- Opel has stopped a planned expansion into China amid geopolitical tensions between Beijing on one side and the U.S. and European Union on the other.
A company spokesperson confirmed the decision to Handelsblatt on Friday, citing current challenges in the auto sector.
In addition to geopolitical tensions, China's strict zero-COVID policies are making entry into the already competitive market even more difficult, Handelsblatt reported.
Opel also lacks attractive models to set it apart from local manufacturers, the paper said -- a challenge shared across foreign automakers battling to make inroads, particularly in China's electric vehicle landscape.
Auto demand in China has been hit by power restrictions and extensive lockdowns in major cities, with Volvo, Toyota and Volkswagen either suspending production or putting their factories into closed-loop systems, which generally still impacts output.
European investment in China is growing more concentrated, with a handful of large firms doubling down on their bets while newer players shy away from growing risks, a recent report by research organization Rhodium Group showed.
"In these circumstances and in light of the volumes required to make a real impact, Opel is putting its plans for entering China's market to rest," Opel told Handelsblatt.
Opel once sold models such as the Astra compact car and Zafira minivan in China, but former owner General Motors pulled the brand from the market because of slow sales and fears that its vehicles competed with sibling cars from GM's Chevrolet and Buick brands, some of which were based on Opel engineering.
Under new owners Stellantis, Opel started to consider expansion beyond its European core market, using Stellantis' global sales and financing infrastructure and promoting its German heritage.
However, Stellantis has less than a 1 percent share of the Chinese auto market and is putting less focus on China as it simplifies its global structure under CEO Carlos Tavares.
In July, the group said it was pulling out of its joint venture with Chinese automaker GAC to produce Jeep vehicles.