End of Jeep’s China JV May Be Prelude For Others

IT HAS BEEN a long and winding road for Jeep in China, as the song has it, which has now ended in the bankruptcy filing of the joint venture (JV) between Guangzhou Automobile Group (GAC) and Stellantis.

The former AMC was the first US automaker to have a production JV in China, setting up Beijing Jeep joint venture in 1984. A succession of ownership changes followed: Chrysler acquired AMC; then Fiat bought Chrysler to create Fiat Chrysler, which became Stellantis after a merger with Peugeot and Citroen maker PSA in 2021.

However, with sales declining and having missed the switch to electric vehicles by Chinese consumers, Stellantis announced in July that it would end the JV.

At the time, its chief executive, Carlos Tavares, cited the growing ‘political influence’ in doing business with partners in China and indicated that the group would switch from local production to importing.

Some commentators seized on this as evidence of ‘decoupling’ in the face of deteriorating US-China relations and an example of a foreign multinational lightening its footprint n China. However, to this Bystander, Setllantis’s case seems sui generis.

Jeep’s sales in China fell to barely 20,000 vehicles in 2021, half the previous year’s total and one-tenth of 2017’s number. The decline has continued this year, with fewer than 2,000 vehicles sold.

Elon Musk’s EV maker Tesla is the only foreign automaker that has not been required to produce in China through a JV. That is a sign of the growing confidence of the domestic industry that it no longer needs foreign technology and expertise as it once did. That is especially true for EVs, which now account for between one-fifth and one-quarter of new car sales in China.

Last year, foreign automakers’ share of the Chinese car market overall, the world’s largest, fell to 45.6% in 2020, a 6.9% decline from 2020, according to China Passenger Car Association.

That is two-thirds of its peak and falling. Trade estimates put foreign carmakers’ EV market share at around 20%.

If those trajectories continue, more foreign auto JVs will follow Jeep in folding.

Toyota Car Recall A Big Embarrassment

Oops. Toyota is recalling 690,000 cars made at two of its joint ventures, Guangzhou Auto and Tianjin FAW because of faulty electrical window switches.  That is more cars than it sold in China last year. Though not a safety threatening defect, the recall is big, and an embarrassment. Not only is it the biggest autos recall in China since 2004, it also highlights Toyota quality/reliability/durability standards and follows a recall of Camry’s earlier this year because of faulty brakes. Models affected by this latest recall include Camry, Corolla, Vios and Yaris.

The recall won’t do much for Toyota’s idling sales in China, either; the Japanese carmaker hasn’t matched the recent success of America’s GM among the foreign manufacturers, largely because it has a limited range of compacts, and so hasn’t been able to capitalize as much on government tax incentives for small cars.