Jeep has closed its only factory in China, reports Bloomberg. Carlos Tavares, CEO of Stellantis, cited local political interference as one justification for the choice. Jeep will still deliver automobiles to dealers even though production in the Asian nation is stopping. Different electrified Jeep models will be delivered to dealers.
It appears that sales of cars with Western brands are declining in China. While sales of US and German-branded vehicles are down, sales of domestically produced makes and models are increasing. According to Tavares, they decreased by around 5% in China during the first half of the year. Even Japanese automakers experienced double-digit declines in new car sales.
Stellantis and other automakers are afraid that prospective economic penalties may affect their commercial operations in China as a result of recent geopolitical developments and escalating political tensions. After Russia invaded Ukraine earlier this year, Renault was forced to halt operations there; as a result, Renault eventually sold all of its holdings in Renault Russia. Jeep wants to keep away from this. Two years earlier, the Iranian economy was devastated by sanctions, forcing PSA Group to halt its business there.
A 12-year manufacturing partnership between Jeep and China’s state-owned Guangzhou Automobile Group comes to an end with the shutdown of Jeep’s sole manufacturing facility. Tavares claims that because GAC wasn’t living up to Jeep’s standards, the business decided “it was better to unwind.” The partnership built the Renegade, Compass, Cherokee, and Grand Commander for the market.
Stellantis’ decision to stop manufacturing the Jeep was not the first time that sales in China had been a concern. There were issues with both manufacturers’ performance in the nation in 2020 when PSA Group and Fiat Chrysler Automobiles discussed their merger. To save money, the two merger.
The vulnerability of today’s global supply networks was made evident by the coronavirus outbreak and the conflict in Ukraine. It has caused automakers, suppliers, and many other companies to reevaluate how and where they conduct business. In the months and years to come, other manufacturers might take preventative measures to safeguard their operations.