Shaky start for Stellantis bid to acquire bigger stake in China – Archyde

MILAN (AP) — Automaker Stellantis’ moves to solidify its position in fast-growing China appeared to have gotten off to a rocky start after one of its joint venture partners said it was not consulted before announcing plans to take a majority stake been .

Stellantis, formed a year ago from PSA Peugeot’s merger with Fiat Chrysler, has less than 1% share of the 21-million-vehicle Chinese market, where it inherited two joint ventures. It plans to lay out its strategy on March 1, but has given some hints in announcements this week.

These include plans to increase its stake in Chinese partner GAC Stellantis from 50% to 75% under new rules that allow more foreign investment. In addition, it announced Friday that its other joint venture partnership with Dongfeng had doubled sales over the past year.

The company said Thursday the deal to expand its stake in GAC Stellantis had been agreed with GAC Group, but the Chinese partner replied that it had not been informed and that the release had not been agreed. The deal is subject to Chinese government approval.

“This is not a good sign,” said Ferdinand Dudenhoeffer from the Center for Automotive Research (CAR) in Germany. “It could mean that the deal doesn’t go through or that the Chinese want more money.”

China has gradually lifted its requirement for foreign automakers to work with state partners through joint ventures to produce cars in China. Foreigners were allowed 100 percent ownership in electric vehicle manufacturers in 2018. This was extended to commercial vehicles in 2020 and to passenger cars this month.

Stellantis’ move to gain greater control over its joint ventures is particularly important given that GAC operates other joint ventures, Dudenhoeffer said. GAC partnerships with Honda, Toyota and Mitsubishi have seen significantly higher sales volumes.

Despite Dongfeng Peugeot Citroen Automobile JV doubling its sales to more than 100,000 vehicles last year, Stellantis — the world’s fourth-largest automaker — lags far behind other foreign automakers. VW and GM each sold about 3.3 million cars in China last year, while smaller Tesla sales rose to about 319,000, according to CAR figures.

Stellantis is banking on its popular Jeep SUVs, manufactured under the GAC joint venture inherited from Fiat Chrysler, to gain a foothold in China. Stellantis is planning a so-called “One Jeep” strategy in China, which will focus on the Changsha plant and prepare the market launch of the Compass model there.

Globally, China is the market to bet on, with CAR forecasting sales of 26.7 million by 2025 and 50 million in the coming decades. Dudenhoeffer said Stellantis’ strategy remains a long shot because of its rear position and also because its brands, including Jeep, are little known in China compared to Volkswagen and GM.

“It’s important to make big investments in China, but they have a lot of competition there. It’s not impossible, but the chance of making Stellantis a big player in China is very slim in my opinion,” he said.

China’s easing of restrictions reflects growing official confidence in the competitiveness of new but ambitious Chinese brands, particularly in electric vehicles. Chinese leaders hoped that increasing competition would force their industry to develop faster and become a global leader.

Previously, foreign brands were limited to 50% of a joint venture, a contractual arrangement in which the two sides shared technology, manufacturing costs and profits.

BMW AG became the first foreign automaker to own a majority stake in a joint venture in 2018, increasing its stake in a partnership with Brilliance Automotive Group from 50% to 75%.

The following year, Tesla Ltd. the first wholly foreign-owned factory in Shanghai.

Automakers, including General Motors Co., Toyota Motor Co. and Volkswagen AG, plan to stick with Chinese partners who bring official connections and sales and procurement networks with them.

Daimler AG’s Mercedes brand has also launched electric vehicle ventures with two Chinese private-sector automakers, BYD Auto and Geely Holding Group.


Joe McDonald contributed from Beijing.

Leave a Reply

Your email address will not be published.