Author: Li Suwan
The troubled GAC Fiat Chrysler Automobiles Co., Ltd. (hereinafter referred to as “GAC Fick”) is facing the fate of imminent termination.
On July 18, the Stellantis Group announced that due to the previously announced Stellantis acquisition withGAC GroupThe joint venture, GAC FCA’s plan to have a majority stake, lacks progress. Stellantis will use an asset-light approach to develop the Jeep brand in China and negotiate with GAC Group to terminate the local joint venture. In the future, Stellantis will focus on distributing imported vehicles under the Jeep brand in China.
The Stellantis Group said that it plans to terminate the established joint venture GAC Fick in an orderly manner, which has been in a state of loss in recent years, and will recognize a non-cash impairment charge of about 297 million euros in the first half of 2022 results.
On the same day, GAC Group announced that GAC FCA has continued to lose money in recent years, and has been unable to resume normal production and operation since February this year. GAC Group and Stellantis are negotiating to terminate the joint venture in an orderly manner, and will properly handle the joint venture in accordance with laws and regulations. matter. The relevant asset impairment has been confirmed in GAC Group’s annual financial report last year.
As competition in China‘s auto market intensifies, new energy vehicles accelerate the encroachment of the fuel vehicle market, and the impact of the epidemic has made GAC FCA’s operations even more difficult this year. According to the June production and sales express report released by GAC Group, GAC FCA has no sales data in June, and the sales volume in the first half of this year was only 1,861 units, down 84.18% year-on-year. The production link of GAC Fick has basically been in a “shutdown” state since February this year. The production figures for February were “35” and for March the figure was “1”.
GAC FCA, established in March 2010, is currently held 50% by Stellantis Group and GAC Group. After many negotiations, GAC FCA realized the domestic production of the Jeep brand in China in 2015, and then launched domestic models under the Jeep brand, such as the Liberty Light, Freeman and Compass, which once drove the sales of GAC Fick up. In 2017, GAC FCA’s sales peaked at 205,000 units, and since then, sales have fallen off a cliff. In 2020, GAC Fick sold only 40,000 vehicles, and its net assets fell from 1.336 billion yuan at the beginning of the year to -331 million yuan, making it insolvent. In 2021, GAC FCA’s sales will further drop to 20,123 units.
A high-level executive of GAC Group said in an interview with a reporter from China Business News last year that the group’s Japanese and independent companies have performed well, while the sales of GAC Fick, the representative of European and American departments, are indeed unsatisfactory. To a certain extent It is related to the fact that American cars have not grasped the changes in the needs of Chinese consumers in recent years.
Stellantis Group and GAC Group have made many efforts to boost GAC Fick, and the two sides have “transfused blood” to GAC Fick many times. Among them, in March 2020, GAC Group announced a loan of 500 million yuan to GAC Fick for the cash flow of GAC Fick’s daily production and operation; in July 2021, GAC Group once again announced an increase of 1.5 billion yuan to GAC Fick, and at the same time It also provided a loan of 250 million yuan for GAC FCA.
In addition, Stellantis Group and GAC Group have also made frequent adjustments in GAC Fick’s personnel and production. After Stellantis dispatched Zhu Hengli as the deputy general manager of GAC FCA and a member of the company’s executive committee in May last year, he then dispatched Mu Anze as the president of GAC FCA in July last year, making him fully responsible for the operation of the Jeep brand in China and management. In September last year, GAC FCA’s production layout was also adjusted. GAC Group released information saying that the Guangzhou FCA Guangzhou plant will complete the transfer of the main production line equipment to the Changsha plant in 2021, and other assets will be disposed of by classification; by March 2022, the cancellation of the “Guangzhou Fiat Chrysler Automobiles Co., Ltd. Guangzhou Branch” will be completed. Before the disposal of the Guangzhou plant, GAC FCA owns the Changsha plant and the Guangzhou plant. The two production bases have a total production capacity of 328,000 vehicles, and the capacity utilization rate in 2021 is only 6%. The two parties reached a consensus to take measures to dispose of the Guangzhou factory to reduce costs.
However, differences between the Stellantis Group and GAC Group have emerged, which can be seen in the preparations for the adjustment of GAC FCA’s equity at the beginning of this year. On January 27 this year, Stellantis Group announced on its official website that it plans to increase its shareholding in GAC FCA from 50% to 75%. GAC Group and Stellantis have agreed to the relevant procedures for the transaction, but they still need to go through the regulatory authorities. approve. Subsequently, GAC Group responded: “GAC Group learned from the official website of Stellantis about its announcement on the adjustment of GAC Fick’s equity. GAC Group deeply regrets that this announcement has not been approved by us.”
In the end, Stellantis Group failed to advance its share expansion plan, and jointly announced the termination of GAC Fick with GAC Group on July 18. This joint venture ended in failure. Since then, the Stellantis Group will continue to expand the Jeep brand in the Chinese market by importing cars, while the GAC Group’s three-pillar development plan of “Japanese, independent and European and American” will be dashed with the termination of GAC Fick.
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Responsible editor: Zhou Wei