On July 8, Stellantis and Guangzhou Automobile Group (GAC) announced their Chinese joint venture GAC Fiat Chrysler Automobiles had officially declared bankruptcy – a first for a Sino-foreign joint venture in China’s car market.
Stellantis is a giant multinational that owns brands including Peugeot, Fiat, Chrysler and Maserati. But in China it was long synonymous with Jeep – an iconic brand whose history in the country dates back to 1949, when Mao Zedong was pictured saluting Chinese troops from a US Army Willys Jeep.
The company’s failure in China comes at a time of fractious US-China relations, but in reality its decline has lessons for every global car maker. For analysts, Jeep’s story shows how even the most successful brands are vulnerable amid the breakneck changes taking place in China’s auto market.
“It won’t be the last” joint venture to go bankrupt, said Zhou Lijun, director and chief researcher of auto industry analysis firm Yiche Research.
“The root of the crisis facing traditional joint-venture automakers is their failure to keep up with the structural transformation of China’s market towards electrification, smart technology, and localisation.”
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The rapid shift away from global car brands has been driven by China’s electric vehicle revolution, which caught many foreign firms off guard. In early 2021, new-energy vehicles accounted for just 7 per cent of total vehicle sales in China, but by July 2024 that had risen to over 50 per cent, CPCA data showed.
A decade ago, Western car brands were a byword for quality, sophistication and reliability in China. But that is no longer the case. To today’s younger consumers, foreign cars often look out-of-date, as many of them offer lower specifications and fewer add-ons than domestic brands.
“They want better design, advanced features, and seamless digital integration, but the problem with joint-venture brands is that most of them are simply bringing over existing European or American models, which no longer resonate with Chinese consumers,” Zhou said.
Yu still sees the traditional “BBA” – BMW, Mercedes-Benz and Audi – as symbols of safety and old-money sophistication, but said her teenage daughter called them “not cool”. Her son simply asked, “What’s BBA?”
In a sign of the times, many used Audis and BMWs are now so cheap on China’s secondary market that Gen-Z consumers on limited incomes are buying them as their first cars. To this new generation, the German luxury vehicles have become bargain, last-resort purchases.
Meanwhile, the main buyers of new cars are middle-class 35-to-45-year-olds, who prefer new-energy vehicles with spacious interiors, modern design, hi-tech features and low running costs, according to Zhou. That is exactly the segment where domestic brands are thriving.
“The market share of joint-venture automakers might dip below 20 per cent or even lower in the next few years,” Zhou said. “To survive, their only hope is to invest heavily in building real local research and development capabilities in China. But for most foreign brands, that’s an almost impossible task.”
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GAC-Fiat Chrysler’s China JV Is Declared Bankrupt July9
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