The official representatives of the American brand Jeep announced that the company was forced to close its only factory in China due to government intervention. However, the automaker will supply and sell various Jeep models in the country.
Jeep has closed its only factory in China, Bloomberg reports. Carlos Tavares, CEO of the Stellantis concern, called local political interference one of the reasons for this decision. However, while production in the Asian country is ending, Jeep will continue to supply cars to dealers. Jeep will supply its dealers with another line of electrified models.
“Sales of Western-made cars in China are clearly falling.”
Sales of domestic brands and models are growing, while sales of American and German car brands are declining. According to Tavares, they fell by about one-fifth in China in the first half of the year. Even for Japanese brands, new car sales have fallen by double digits.
Recent geopolitical events and growing political tensions have caused Stellantis and other automakers to worry about potential economic sanctions that could disrupt their business operations in China. Earlier this year, Renault had to stop operations in Russia. This eventually led to Renault selling all of its shares in Renault Russia. This is something Jeep hopes to avoid. Two years before, sanctions hit the Iranian economy, and PSA Group had to abandon operations in the country.
The closure of Jeep’s only factory ends a 12-year manufacturing agreement with Guangzhou Automobile Group, a state-owned automaker in China. According to Tavares, the GAC did not meet Jeep’s expectations, so the company decided it was “better to relax.” The partnership created Renegade, Compass, Cherokee, and Grand Commander for the market.
Concerns about the success of sales in China arose even before the decision of Stellantis to cease production of Jeep. In 2020, when PSA Group and Fiat Chrysler Automobiles were negotiating a merger, concerns arose about the work of both automakers in the country. They teamed up to cut costs.