LONDON -- The bankruptcy of Stellantis' Jeep joint venture in China could spell trouble for other global automakers whose output has plunged over the last five years in the world's largest car market, as domestic players rapidly gain overtake them.
The first joint venture failure by a foreign brand in the electric vehicle era, the Oct. 31 bankruptcy filing marks a turning point in that Chinese automakers are beginning to surpass the long-dominant international brands in giving consumers what they want.
"I do not expect Stellantis to be an isolated case," said Marco Santino, a partner at management consultants Oliver Wyman. "Probably almost all of the western automakers will have to review the industrial logic of their presence in China."
A spokesman for Stellantis said Jeep would operate through an "asset light" strategy in China, importing vehicles via a distribution model that is profitable for its Maserati and Alfa Romeo brands.
"Jeep remains fully committed to its existing and future customers in China," the spokesman said, adding Stellantis' dealer network in China remains fully operational.
Some elements of the Jeep joint venture's failure are particular to Stellantis - and the former car groups that feature among its 14 brands. But data compiled for Reuters by consultancy LMC Automotive expose a problem shared by a number of other global automakers: plummeting Chinese plant usage.
The fewer cars a plant produces, the more likely it is to be money-losing.
The Jeep failure in China happened less than two years after Stellantis was formed by the merger of PSA Group and Fiat Chrysler Automobiles.
In the run-up to the deal, CEO Carlos Tavares had said no automaker could afford not to be in China and the expectation was the two companies would together be better equipped to make headway there.
But Stellantis earlier this year said it would end its venture with local partner Guangzhou Automobile Group, just months after saying it would raise its stake to 75 percent from 50 percent.
The U-turn leaves the world's No. 3 automaker by sales with only limited Peugeot and Citroen production in China, which it has said could also be shut down, although it has yet to decide on that.