SHANGHAI — The Chinese government's announcement that it will phase out joint-venture restrictions by 2020 bodes well for foreign automakers in China, as it will allow them to split from their partners and gain full control of local operations.
But a complete separation will be hard for some global brands that manufacture in China, and it may not be desirable for major global automakers such as General Motors.
The luckiest ones may be Japanese brands such as Toyota and Honda and Korea's Hyundai.
Japanese and Korean automakers are mainly compact car makers in China. And they have steadily expanded their lineups of locally produced hybrid vehicles in the past few years. The companies are confident that they can quickly launch more alternative-energy vehicles in China on their own to meet local regulations on fuel economy and electrified vehicles.
It might also be relatively easy for Fiat Chrysler Automobiles to terminate its joint venture with Guangzhou Automobile Group Co. That would allow more Jeep models to be assembled at a subsidiary wholly owned by FCA.
Most European brands would have similar leeway, but Volkswagen Group is an exception. The German giant, which runs joint ventures with China FAW Group Corp. and SAIC Motor Corp., sold 4.18 million vehicles in China under various brands in 2017.
As China's largest light-vehicle maker, VW has come under tremendous pressure to accelerate output of electrified vehicles as required by Beijing's carbon credit program. The program, due to be enacted in 2019, is designed to prod automakers to ramp up output of electric and electrified vehicles.
VW won't begin producing EVs in China for its own brands until 2020. Fearing it cannot meet the program's requirements on its own, VW established a third joint venture in China, this time with leading Chinese EV maker Jianghuai Automobile Co. The new partnership, incorporated last year, is set to build and sell low-priced EVs under a new brand beginning this year.
As long as the regulatory pressure to boost EV production persists, VW will continue to rely on the EV joint venture with JAC.