The owner of Jeep signed a deal to acquire majority ownership of its Chinese joint venture, taking advantage of Beijing’s decision to loosen control of its auto industry amid fraying ties between China and the West.
Stellantis STLA 2.98% NV—which also owns the Chrysler, Peugeot and Fiat brands—will increase its stake in a partnership with China Guangzhou Automobile Group Co., Ltd. to 75% from 50%. Financial terms weren’t disclosed and the companies are still working on the details of the deal, which remains subject to the approval of the Chinese government.
China moved to scrap joint-venture rules in 2018 as trade tensions soared with the U.S. After the U.S. called for a level playing field in the world’s biggest auto market, Beijing pledged to phase out rules requiring foreign auto makers to share factory ownership and profits with Chinese companies by 2022.
BMW AG has said it would pay about $4 billion to take control of its partnership with Brilliance China Automotive Holdings Ltd. Volkswagen AG announced plans to increase its stake in a joint venture with China’s JAC Motors to 75% from 50%. But other auto makers have said it would be too complex to modify or break away from the partnerships, some of which have been operating for more than two decades.
Stellantis’s brands have struggled to gain a foothold in the world’s largest auto market. In September, the company said it planned to streamline the joint venture’s operations, closing a plant in Guangzhou and focusing production in the city of Changsha, where it produces models including the Jeep Cherokee. Stellantis has also been reviewing its manufacturing footprint in Wuhan and other parts of China, according to people familiar with the matter.
The deal is a pivotal step in the tenure of Stellantis Chief Executive Carlos Tavares. The company was forged last year through the merger of Fiat Chrysler Automobiles NV and France’s PSA Group. Mr. Tavares has pledged to unveil a long-term strategic plan for the group on March 1, including details about its China strategy.
In China, the combined sales of the old Fiat Chrysler and PSA Group accounted for less than 1% of a market that sold 20 million vehicles in 2020, according to industry data. Fiat Chrysler has long struggled to turn a profit in the world’s largest automotive market, while the French car maker sold only 45,965 vehicles in China that year, continuing a sharp multiyear decline.
“We cannot be away from the biggest market in the world,” Mr. Tavares said in an interview last year.
Write to Nick Kostov at [email protected]
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