GAC blasts Stellantis CEO as Jeep joint venture collapses

Stellantis' state-owned Chinese partner accused the European company of disrespecting customers in the world’s biggest auto market in an escalation of a dispute over their failed Jeep venture.

Guangzhou Automobile Group on Friday said comments Stellantis CEO Carlos Tavares made the previous day on how trust had broken down between the two companies over their Chinese manufacturing partnership were “unbelievable.”

Several Stellantis ventures “failed to achieve success, which is the result of a lack of respect for customers in the Chinese automobile market,” GAC Group said in a statement.

The latest twist in the months-long back-and-forth comes after Tavares on Thursday during earnings presentations and an interview with Bloomberg Television flagged growing risks of operating factories in China because its politicians are increasingly meddling in business.

Tavares added that GAC did not want to abide by the binding memorandum of understanding the companies had signed and "preferred to be in breach, rather than execute it. We took the conclusion that of course trust was broken."

Stellantis announced last week it would shutter its only Jeep factory in China, saying it was an unprofitable enterprise best replaced with imports. Jeep is exiting as more established foreign auto brands have struggled to maintain their share of the market, raising questions about their long-term future in China.

The joint venture “has not been able to establish a mutually trustworthy operating mechanism adapted to the highly competitive environment in China in order to turn the adverse situation of continuous losses in recent years,” GAC Group said.

GAC added it hoped the companies would terminate the venture "in a pragmatic and responsible manner."

Stellantis officials declined to comment on Friday about GAC's statement.

While Tavares acknowledged that the business was racking up losses, he said the company’s reasons for leaving ran deeper. The decision was rooted in “broken trust” with its local partner, as well as Chinese policy favoring the emergence of local brands, he said.

While Stellantis had signed a deal to raise its stake in the GAC joint venture to 75 percent, GAC Group “did not do what it was supposed to do,” Tavares said. “So we considered that it was better to unwind.”

A spokesman for Stellantis said an agreement to proceed to filing was signed by the company and GAC Group in February; he declined to comment further on the statement.

The Chinese group said it didn’t file paperwork because there was “no consensus on relevant agreements,” and that Stellantis was the party not fulfilling its commitments.

The venture had produced the Jeep Cherokee, Renegade, Compass and Grand Commander models primarily for the China market. Stellantis will instead ship an electrified lineup of different Jeep vehicles to dealers in the country.

With less than 1 percent of the Chinese market, Stellantis has been looking to revamp its strategy. In its 2030 business plan released in March, Stellantis said it would adopt an "asset-light" business model in China, still aiming to increase revenue but via imports rather than domestic production.