(Bloomberg) — Stellantis NV’s move to take control of its struggling Jeep joint venture in China sparked pushback from its local partner, opening a potential rift that could slow the carmaker’s plan to bolster sales in the biggest auto market.
The company formed from the merger of Fiat Chrysler and PSA Group said Thursday it plans to increase its shareholding in the venture with state-owned Guangzhou Automobile Group Co. to 75% from 50%.
“GAC Group learned from the official website of Stellantis about its announcement on the equity adjustment,” of the venture, the Chinese company responded in a statement. “This announcement is not approved by us, and GAC Group deeply regrets it.”
A spokesman for Stellantis declined to comment.
Chief Executive Officer Carlos Tavares has for months been promising investors he’d improve the carmaker’s dismal performance in China, and the shareholding change is key to his reboot. Stellantis is preparing to promote brands including Jeep and DS in the country and push an electric Opel model.
Delicate Relations
Stellantis announced the plan before it was approved by Chinese authorities, and it’s not the first automaker to get pushback from its local partner. When Volkswagen AG CEO Herbert Diess in 2019 said the German manufacturer may consider changing the ownership structure of a partnership with SAIC, the Chinese firm responded by saying that the two parties never discussed that.
GAC said it would “strictly abide by national policies and regulations” and promote the venture “in accordance with the principles of mutual trust and win-win results.”
Stellantis, which plans to announce more details on its China efforts during a larger strategy update in March, rose 1.8% as of 1:56 p.m. in Paris. The company’s shares have gained about 6% this year.
The modification within the JV comes as China removed a cap on foreign ownership that has for decades limited global carmakers’ access to the market. Bloomberg reported last year that Stellantis was in advanced discussions to raise its stake in the business formed in 2010. BMW is also set to increase its stake in its venture with local partner Brilliance China Automotive Holdings Ltd. to 75% from 50%.
(Updates with Chinese partner’s comment from first paragraph.)
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