Stellantis joint venture with China’s GAC to close one of two plants By Reuters

© Reuters. FILE PHOTO: A Stellantis sign is seen outside the company’s headquarters in Auburn Hills, Michigan, U.S., June 10, 2021. REUTERS/Rebecca Cook/File Photo

BEIJING (Reuters) -Stellantis NV’s Chinese joint venture with GAC will close one of its two factories in China by next March, GAC told Reuters, as Stellantis restructures operations in the world’s biggest auto market where it has struggled to sell cars.

The joint venture, which currently has capacity to make 328,000 vehicles a year, sold only 12,288 in the first seven months this year, all Jeep-branded sport-utility vehicles.

It will transfer production from Guangzhou to Changsha to “increase (the) utilisation rate of plants and lower cost”, GAC said in a statement. The Changsha factory has annual manufacturing capacity for 164,000 vehicles, still far more than the joint venture sells.

The joint venture was launched by GAC and FCA, which merged with PSA to become Stellantis. A Stellantis spokesperson declined to comment.

As well as the GAC partnership, Stellantis also operates a joint venture in China with Dongfeng Motor Group, which sold 47,788 cars between January and July.

As competition heats up in China, where over 25 million vehicles were sold last year, several joint ventures between international automakers and local partners cut operations due to declining sales.

Mazda Motor (OTC:) ended its joint venture with FAW last month, and Hyundai Motor’s tie-up with BAIC has sold one factory to electric vehicle maker Li Auto.

Last year, Renault SA (OTC:) shut its venture with Dongfeng less than five years after they started production. In 2018, Suzuki Motor exited its only Chinese joint venture with Changan.

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