Jeep Owner’s Chinese Partner Says It Was Caught Unaware by Deal Announcement

Later Thursday, however, the Chinese manufacturer issued a statement saying it had learned of the announcement from the Stellantis website. GAC said it “deeply regrets that this release is not agreed by us.”

A Stellantis spokesman declined to comment.

Stellantis’s push for majority ownership of its Chinese joint venture aims to take advantage of Beijing’s decision to loosen control of its auto industry. 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.

Some analysts say it is essential for Western car makers to garner majority ownership of joint ventures in China so they can make quicker decisions without months of deliberations with their Chinese partners. BMW AG has said it would pay about $4 billion to take control of its partnership with Brilliance China Automotive Holdings Ltd., while 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.

“Having 75% ownership allows the company to be more agile,” said Thomas Besson, an analyst at brokerage firm Kepler Cheuvreux. “They’re starting almost from scratch and trying to build up a business in a very competitive market.”

GAC, however, appeared to chafe over the suggestion that Stellantis would now be running the partnership. “GAC Group will strictly abide by the national policies and regulations and adhere to the principle of mutual trust and win-win,” the company said.

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.

Mr. Besson also said Jeep’s appeal is likely to be high in China, where sport-utility vehicles are popular. However, “that assumes that the relationship between China and the U.S. does not deteriorate too much,” he said. Mr. Besson recalled how Japanese car makers suffered sharply lower sales in China in 2012 following a territorial dispute between the two major trading partners.

The push to expand in China 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]