The venture between Stellantis (NYSE: STLA) and Guangzhou Automobile Group producing Jeep vehicles in China is filing for bankruptcy, Stellantis said on Monday, after a lengthy decline for the oldest foreign auto brand in the world’s largest market.
The European carmaker said in a statement it had fully impaired the value of its investment in the joint venture in its results for the fist half of 2022.
Stellantis said Guangzhou Automobile Group had also approved the bankruptcy filing and that it would continue to provide service to Jeep customers in China.
Stellantis terminated the venture with Guangzhou Automobile Group in July, only months after it said it would raise its stake in the business to 75% from 50%.
In the following days, GAC blasted Stellantis, saying that it was “deeply shocked” by critical comments from Stellantis about the end of their joint venture in China.
Sales for the venture, which sold the Jeep Cherokee SUV and the Compass crossover, have been in sharp decline for the past four years. Sales fell by 50% in 2021 from the previous year to 20,396 vehicles.
For 2022, it sold less than 2,000 vehicles. In May, it reported selling only a single vehicle.
While reporting financial results in July, Stellantis Chief Executive Officer Carlos Tavares said that over the last five years “the political influence” in doing business with its partners in China was growing. He said then he did not see a major long-term impact from the company’s decision to break the joint venture.
STLA began Monday fell in price 17 cents, or 1.2%, to $13.40.
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