Stellantis renounces China and stops production of Jeeps

Another move that highlights the weakness in the rich Chinese market of Stellantis, the automotive group led by Carlo Tavares and chaired by John Elkann. After announcing last Friday the agreement with Dongfeng for the purchase of 3.16% of Stellantis from the group, yesterday ended the 50% 50% joint venture with Guangzhou Automobile Group (Gac Group) that produces and distributes products of the “Jeep” brand in China. “Stellantis and Gaspe of the note have begun negotiations for the termination of the joint venture established in March 2010 that produces and distributes Jeep products in China.

The two companies will proceed with the orderly cessation of local Jeep production, while Stellantis will recognize a non-monetary impairment of approximately €297 million in the results for the first half of 2022.” Stellantis, which should have acquired a majority stake in the joint venture, “will focus on the distribution of imported products for the Jeep brand in China and will strengthen the offering of electrified vehicles.”

Yesterday, Stellantis share appreciated 1.92%, however for Equita analysts “the effects of this movement are being verified, further demonstrating the difficulties of Stellantis in identifying a solution to increase penetration in the Chinese market”. Many corporate deals between international automakers and Chinese partners are under pressure, where competition has increased, while lockdowns in response to the pandemic have also affected production and sales. In detail, Stellantis announced last January its intention to increase its stake in the joint venture from 50% to 75%, a plan not well received by its Chinese counterpart. Furthermore, China has always been a weak point for the group led by Tavares, which has a market share in the country of less than 1%.

With Dongfeng, on the other hand, the agreement reached refers to the 99.2 million shares of Stellantis common stock held by Dongfeng, which represents 3.16% of the share capital of Stellantis. Pursuant to the agreement, Dongfeng may, from time to time, make an offer to sell to Stellantis all or part of the Stellantis common shares held by Dongfeng. Stellantis will have the right, but not the obligation, to accept this proposal and to acquire the Stellantis shares offered at the average closing price per share on Euronext Milan for the period of five trading sessions immediately preceding the date on which the Chinese group presents itself. the ofert. Finally, yesterday, Stellantis subsidiary Free2move completed the acquisition of Share Now, the European market leader and pioneer in the field of free-flowing car sharing.

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Source: Iltempo

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