Jeep-GAC joint venture in China is bankrupt

The relationship between Jeep-maker Stellantis and its joint venture (JV) with Chinese automaker GAC was rocky at best and it came to a head in June when the collaboration was terminated after the former announced that the partnership was over and that Jeep vehicles will no longer be made in China.

Four months after, any hopes of salvaging the situation were dashed after the Stellantis JV filed for bankruptcy stating that parent company Stellantis N.V. “fully impaired the value of its investment in the GAC-FCA JV and other related assets in its first half of 2022 financial results.”

GAC approved the move to file for bankruptcy but not without defending its position by stating that the JV was unsuccessful because both companies were not able “to establish a mutually trustworthy operating mechanism adapted to the highly competitive environment in China to turn the adverse situation of continuous losses in recent years.”

The statement from the GAC Group also added that the failure of the JV “is the result of a lack of respect for customers in the Chinese automobile market.”

Stellantis says they will shift to a distribution model for the Jeep brand in China and will continue to “provide quality service to existing and future Jeep brand customers in China.”

It may not appear to be a big issue in the Philippines but here is how it will affect us. Jeeps made in China are roughly 20% cheaper than the models imported from the USA. This allowed Jeep distributor Auto Nation Group (ANG) to price both the Renegade and Compass below PHP 2 million. But since the partnership is officially off, how this development affects where units sold by ANG are sourced and how these are priced is pretty obvious.

Quality should go up a notch, but will that justify the price?