Here's Why Stellantis Looks To Discontinue Its China JV

Stellantis NV STLA braces to terminate the joint venture accounting for the manufacturing and distribution of its Jeep brand in China and focus on selling imported Jeep vehicles in the country.
It would book a non-cash impairment charge of €297 million in its first-half results due to its decision.
Stellantis reasoned a lack of progress in its plan to take a majority share in the joint venture with China’s Guangzhou Automobile Group Co, Ltd GNZUY.
Stellantis intends to cooperate with GAC Group in an orderly termination of the joint venture formed in March 2010, which has been loss-making in recent years.
Stellantis looks to focus on selling an electrified lineup of imported Jeep vehicles in the country.
The decision marks a setback for Stellantis CEO Carlos Tavares, who aimed to exploit the joint venture to expand the car maker’s business in China, the Wall Street Journal reports.
Stellantis is the result of the 2021 merger of Fiat Chrysler Automobiles NV and France’s PSA Group.
Stellantis, had previously shared its plans to increase its stake in the partnership with GAC to 75% from 50%. However, GAC disagreed with the offer.
GAC also appeared to rub over the suggestion that Stellantis would run the partnership. “GAC Group will strictly abide by the national policies and regulations and adhere to the principle of mutual trust and win-win,” the company said.
Some analysts consider it essential for Western car makers to garner majority ownership of joint ventures in China for prompt decisions making.
Recently reports surfaced claiming Stellantis could lose 220,000 vehicles in 2022 as lost output due to the semiconductor crisis.
Price Action: STLA shares traded higher by 2.89% at $12.44 in the premarket on the last check Monday.
Photo via Wikimedia Commons

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