Stellanis is shutting down its only Jeep factory in China — the largest car market in the world. It’s reportedly due to increased meddling by local politicians.
According to Bloomberg, the automaker is implementing an “asset-light” strategy in China because of concerns that rising political tensions between that country and the rest of the world could lead to sanctions.
“We have been seeing over the last few years more and more political interference in the world of business in China,” Carlos Tavares, Stellantis CEO, told Bloomberg. “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.”
Last week, the company announced it was terminating a 12-year manufacturing partnership with state-owned Guangzhou Automobile Group. These comments from Tavares certainly give more context to that decision.
Another reason for leaving? Tavares pointed out that German and U.S.-branded vehicle sales dropped by about a fifth in China during the first half of 2022. There’s also been a double-digit drop for Japanese brands. Meanwhile, Chinese domestic companies saw sales rise in the same time period.
“We see that for Western players, selling cars in China is becoming increasingly difficult,” he told reporters. “There is an absolutely major shift in the Chinese market.”
He went on to say that Jeep’s venture into China was racking up losses, but the decision to leave was rooted in “broken trust” with Guangzhou and the Chinese Communist Party which had economic policies that heavily favored domestic automotive companies.
Tavares said GAC didn’t do what it was “supposed to do” when Stellantis signed a deal raising its stake in the joint venture that produced the Jeep Cherokee, Renegade, Compass and Grand Commander (a Chinese-only model).
Stellantis isn’t pulling Jeep out of China altogether; instead the company will ship an EV lineup of different Jeeps to dealers in the country.