Stellantis terminates Jeep joint venture with China's GAC

PARIS -- Stellantis announced the "orderly termination" of its joint venture with Chinese carmaker GAC, which has been producing Jeep vehicles.

The decision comes only four months after Stellantis said it would raise its stake in the business.

"We came to the conclusion that it was better to close the joint venture," said a Stellantis spokesperson, adding that the venture had been loss-making and that the carmaker could still operate in China through its dealer network.

GAC reprimanded Stellantis in January for announcing plans to raise its stake to 75 percent from 50 percent.

GAC agreed the partnership in 2010 with Fiat Chrysler, which later merged with PSA to form Stellantis.

With less than a 1 percent share of the Chinese auto market, Stellantis has been looking to reshuffle its strategy in the country as part of a broader simplification of its global structure under CEO Carlos Tavares.

In its 2030 business plan released in March, Stellantis said it would adopt an "asset-light" business model in the country, where it also has a joint venture with China's Dongfeng.

The GAC venture, which saw a 50 percent decline in sales last year, closed one factory in March and the Dongfeng venture recently closed two plants due to excess capacity.

GAC confirmed in a statement on its website that the two companies were negotiating how to terminate the joint venture after years of losses.

Stellantis aims for revenues in China to reach 20 billion euros ($20.3 billion) by 2030, totalling 7 percent of total expected revenue, a steep jump from the 3.9 billion euros turned over in China, India and Asia Pacific in 2021.

Automakers including BMW and Volkswagen have raised their stakes in joint ventures with Chinese partners in recent years after the country loosened regulations which previously prevented foreign automakers from owning a majority.

Stellantis said in January that its plans to raise the stake were subject to approval from China's government.

Stellantis will recognize a non-cash impairment of around 297 million euros ($300 million) for its first half-year results, the company said.

"The Jeep brand will continue to strengthen its product offering in China with an enhanced electrified line-up of imported vehicles," Stellantis added.