Stellantis is closing its only Jeep factory in China, the world’s largest auto market. His company cites the increased involvement of local politicians as the reason for this decision. The automaker also worries that escalating political tensions between China and the rest of the world could lead to sanctions.
Jeep ends production in the country against China’s local economic policies
The company announced last week that it has terminated its 12-year manufacturing partnership with the Chinese state-run Guangzhou Automobile Group (GAC). This step from the company after the termination of the partnership also reveals the seriousness of the situation.
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Stellantis CEO Carlos Tavares used the following statements on the subject in a statement to Bloomberg:
Over the past few years, we’ve been seeing more and more political interference in business in China. We don’t want to be a victim of cross-sanctions like other companies in other parts of the world lately.
Another reason for Jeep to leave the Chinese market is the decrease in sales. Tavares, CEO of Stellantis, which includes Jeep, stated that in the first half of 2022, German and US-branded vehicle sales in China fell by about one-fifth. In the Chinese market, Japanese brands also experienced a double-digit decline, while local automakers saw an increase in their sales during the same period.
Tavares uses the following statements about the drop in sales:
We’re seeing that it’s getting harder and harder to sell cars in China for western players. There is definitely a big shift in the Chinese market.
Although Jeep’s sales in China have decreased, it is stated that other reasons are stronger behind the brand’s termination of production in the market. Accordingly, Jeep is leaving the country due to the loss of trust in the Chinese Communist Party, which has economic policies that support Guangzhou and domestic automotive companies.
Tavares claims GAC has failed to do its part after Stellantis signed an agreement to increase its stake in the joint venture that produces Jeep models. The two companies jointly produced the Jeep Cherokee, Renegade, Compass and Grand Commander models in China.
Although Jeep has stopped production in China, it is not withdrawing completely from the country. The US-based manufacturer will now export its models to China. It is also among the information that Jeep will only offer electric models from the Chinese market from now on.
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