Jeep to close its factories in China

Jeep will shutter its joint venture factories in China, meaning buyers there will soon face sharp price increases for its models.

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Jeep, one of the pioneers of automotive manufacturing in China, will soon be bidding adieu to its manufacturing plants in the Middle Kingdom.

Overnight, Stellantis – the parent company of Jeep, Fiat, Peugeot and many other brands – announced it will end its joint venture with GAC in China.

The move to close GAC FCA will cost the French-Italian-American automaker at least €297 million ($441 million).

Last night’s announcement is due to a “lack of progress” in discussions for Stellantis to purchase a majority shareholding in the GAC FCA operation. Stellantis says the GAC FCA joint venture “has been loss-making in recent years”.

GAC FCA currently has two factories, one in Changsha and the other in Guangzhou, and currently produces the Jeep Renegade, Compass and Cherokee.

It also makes the Grand Commander, a three-row crossover based on the Cherokee, which was designed and produced exclusively in China.

Once manufacturing has ceased at GAC FCA, Jeep will shift to an “asset-light approach”, and become an import-only brand.

According to Jeep there will be an emphasis on electrified vehicles. Presumably this gives the brand some justification for the substantially higher prices it will need to charge for mainstream models, as they will now incur high import tariffs.

Today’s news marks an unfortunate milestone in Jeep’s history in China.

In the early- to mid-80s, the brand setup the Beijing Jeep joint venture with Beijing Automobile Works (BAW), allowing it to produce cars in a country that was slowly opening up to world and beginning its embrace of capitalism.

From 1985 Beijing Jeep began production of the recently redesigned Cherokee.

Like Volkswagen with its partner SAIC, Jeep was one of the first foreign automakers in China, and these early entrants enjoyed much success with the emerging upper middle and entrepreneurial classes.

In time Beijing Jeep added some locally developed models. The roster grew to include Mercedes-Benz, Chrysler and Mitsubishi vehicles after the 1998 “merger of equals” between Daimler and Chrysler.

After Daimler jettisoned Chrysler to private equity firm Cerberus in 2007, the German automaker kept Beijing Jeep — since renamed Beijing Benz — for itself. Chinese production of Jeep, Chrysler and Mitsubishi models largely ceased around this time.

Partially due to the global financial crisis of the late 2000s, Chrysler filed for Chapter 11 bankruptcy protection and was slowly subsumed by Fiat.

Recognising the need to increase its presence in China, Fiat formed a partnership with GAC in 2010. GAC Fiat began production of the Fiat Viaggio, a rebadged Dodge Dart, in 2012.

It wasn’t until 2016 that local production of Jeep vehicles began again. Now just six years later Jeep is reverting to import-only status.

Stellantis continues to operate joint venture operations for its Peugeot and Citroen brands with Dongfeng. It’s possible in the not-too-distant future Jeep could return to Chinese manufacturing via this partnership.

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Derek Fung

Derek Fung would love to tell you about his multiple degrees, but he's too busy writing up some news right now. In his spare time Derek loves chasing automotive rabbits down the hole. Based in New York, New York, Derek loves to travel and is very much a window not an aisle person.

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