GAC Fiat Chrysler declared bankrupt after years of decline

GAC Fiat Chrysler Automobiles, the joint venture between Stellantis and China's Guangzhou Automobile Group, has been declared bankrupt, marking the formal end of a once-promising partnership that brought the Jeep brand to Chinese consumers.

The company posted images of a ruling by a court in China's Hunan province confirming the bankruptcy declaration on its official social media account on Tuesday.

Founded in March 2010 with a 50:50 investment split between GAC and Stellantis, the joint venture had a total investment of around 17 billion yuan ($2.3 billion).

The partnership initially gained traction with the local production of Jeep models starting in 2015.

In 2016, propelled by the success of three SUV models — the Compass, Cherokee, and Renegade — the JV saw sales surge 260 percent year-on-year to nearly 180,000 units. Sales peaked at 222,000 units in 2017.

However, the momentum quickly faded. Consumer complaints, notably related to excessive oil consumption in some models, culminated in Jeep being named and criticized on China's high-profile "315" consumer rights television program.

Sales plummeted in subsequent years: 125,200 vehicles in 2018, 73,900 in 2019, 40,500 in 2020, and just 20,100 in 2021.

Beyond operational issues, tensions between the two shareholders also came into public view.

In January 2022, Stellantis announced a unilateral plan to increase its stake in the JV from 50 percent to 75 percent, a move GAC swiftly rejected, saying it had not been consulted and expressing "deep regret" over the announcement.

On July 18, 2022, GAC announced the termination of the joint venture, citing sustained losses and an inability to resume normal production. Both parties agreed to wind down the company.

Stellantis has previously stated it will take responsibility for providing maintenance and after-sales services for Jeep and Fiat vehicles sold under the joint venture.

Unlike German carmakers, Italian or French brands have been slow and reluctant in the Chinese market, said analysts, adding that Stellantis even does not have a Chinese name till today.

They add that such brands could manage to leverage their technology and branding in the age of gasoline cars, but are doomed in the era of new energy vehicles that highlights speed, efficiency and innovation.

Stellantis is a multinational automotive corporation, owning brands ranging from Peugeot and Citroen to Maserati and Alfa Romeo.