On Monday, the venture between Stellantis and Guangzhou Automobile Group Co (GAC) to produce Jeep vehicles in China will file for bankruptcy. The said measure was taken after the extended decline of the oldest foreign auto brand in the world’s largest market.
Stellantis stated that the joint venture’s investment value had been thoroughly compromised in the first half of 2022. However, despite the bankruptcy announcement, they added that they would continue to provide service to Jeep owners in China.
According to GAC, the liabilities of the joint venture were almost 111% of its assets of 7.3 billion yuan, which is one billion in US dollars. However, in the Chinese company’s stock exchange filing, they stated that GAC’s operation would not be hindered by the said bankruptcy.
In the past four years, sales for the venture, which sold the Jeep Cherokee SUV and the Compass crossover, have been in a slump. In 2022, it sold fewer than 2,000 vehicles and only one in May.
“The Jeep venture had failed to keep up with the changes in the China market and to adapt to customer demands,” said Bill Russo, head of Shanghai-brd consultancy Automobility Ltd and a former Chrysler executive.
“It had every right to be successful in a market that embraced sport-utility vehicles,” he stated. “But you can’t be running a 1980s business model when the 21st century has arrived.”
Buyout offers to Stellantis’ salaried employees
A day before Stellantis filed bankruptcy; the company had offered its salaried employees a buyout of an unknown amount as they began to transition to electric vehicles.
As stated by Stellantis spokesperson Jodi Tinson, “As part of our transformation to become a sustainable tech mobility company and the market leader in low-emission vehicles, in October we offered certain salaried US employees the option to voluntarily separate from the company with a favorable package of benefits that otherwise would not be available to them.”
The deadline for the said buyout is on December 5. The eligible employees are those who have been part of the company for at least a decade and those who are 55 years old and older.
