Carlos Tavares Mulls Stellantis Ending Production in China

Stellantis CEO Carlos Tavares stated yesterday that it may stop all production of it’s brands in China. The company has already terminated a joint venture that built Jeep SUVs in China after failing to take a controlling stake, and is in talks with local partner Dongfeng about its Peugeot and Citroën brands.

“Our strategy anticipates the possibility of geopolitical tensions,” Tavares told reporters at the Paris Motor Show, citing building tensions with the West as a deterrent to investment there. “There have already been several times where we’ve been thrown out of a country when Western sanctions are imposed… can we be sure that the stability of relations between China and the world is guaranteed?”

Carlos Tavares (front) at Paris Motor Show 2022

Peugeot and Citroën brands have struggled to achieve significant market share in China, unlike German competitor Volkswagen, which sold three million cars in China last year.

Surprisingly, Tavares added; “We’re still selling Jeep and Alfa Romeo vehicles built outside China very profitably” (within China — suggesting the same model could work for Peugeot and Citroën). “If we take our strategy all the way, we don’t need any factories in China. In a world of growing tensions, we don’t need to create vulnerabilities.”

Stellantis is aiming for revenues of 20 billion euros ($19.6 billion US) in China by 2030 with its 14 brands, but will China, with a burgeoning home auto manufacturing market, continue to allow a viable means to sell imported cars, especially from brands that have pulled out of production agreements within the country?

Complaining of unequal treatment from Beijing, Tavares stated; “The red carpet is rolled out for Chinese manufacturers in Europe, and that’s not how we’re welcomed in China. Import taxes on vehicles coming from China should be symmetrical with those applied to Western vehicles in China. We are in a world that’s fragmenting, states are trying to create bubbles. If we think these bubbles will close at some point, we’ll have to sell in Europe vehicles that are made in Europe. We will adapt.”

Stellantis may need to adapt sooner than later as Chinese manufacturers like BYD and GWM’s two new energy brands, WEY and ORA, took a variety of vehicles to the Paris Motor Show this week along with Vietnam’s VinFast. All are showing lower-cost electric vehicles they hope will gain a foothold in European markets.

Update — October 31, 2022:

Stellantis announced today that the joint venture between it and Guangzhou Automobile Group producing Jeep vehicles in China is filing for bankruptcy, announcing in a statement it had fully impaired the value of its investment in the joint venture in its results for the first half of 2022. This after a lengthy decline for the oldest foreign auto brand in the world’s largest market. Stellantis said Guangzhou Automobile Group Co (GAC) had also approved the bankruptcy filing and that it would continue to provide service to Jeep customers in China.

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