China dealers seek compensation over Stellantis Jeep failure, report says

SHANGHAI -- Chinese dealers that sell China-made Jeep models are asking Stellantis for millions of dollars in compensation after the automaker stopped producing the brand in China, according to a letter signed by the dealers seen by Reuters.

Stellantis is overhauling its strategy in China after agreeing to file for bankruptcy of a Jeep joint venture with local partner Guangzhou Automobile Group in October.

Stellantis has since said it would pursue an import-based business model in China.

Its "unilateral" decision to terminate the partnerships with the dealers has caused their businesses to make losses and led to layoffs, according to the letter signed by 26 dealers as of Tuesday.

Stellantis declined to comment on the subject but said in emailed comment it abides by Chinese law and that its joint venture's bankruptcy application was going through local court proceedings.

GAC declined to comment. Stellantis announced the termination of the JV with GAC in July.

Cao Wei, president of Lianyungang Xuncheng Auto Sales and Service, and one of the letter's organizers, told Reuters that more dealers would join the petition and estimated they would ultimately seek total compensation of 900 million yuan ($130 million) from Stellantis.

They are asking Stellantis to pay them 18 million yuan for each store affected to cover the losses including initial investments and severance payments and to refund their deposits and pay sales rebates, the letter showed.

Cao said Stellantis had refused to pay what he called the "basic bill," which includes deposits and sales rebates, to at least 50 dealers who were authorized by the JV to sell locally produced Jeep vehicles in China.

The Jeep venture's Chinese shareholder had agreed to pay 50 percent of that bill to all dealers, but Stellantis had refused to pay the rest, as it did not recognize them as authorized dealerships, Cao said.