Stellantis joint venture with GAC to result in closure of Chinese factory

The multi-national automotive manufacturing group Stellantis will be reducing its footprint in China, closing one of its two plants due to low sales.

As a part of the Chinese Government's requirement for all foreign manufacturers to be aligned with a local partner, Stellantis – through Fiat-Chrysler China – had formed a joint venture with GAC, operating across two plants in Changsha and Guangzhou.

According to Reuters, poor sales in the world's most populous country will force the Dutch-based company to transfer production from Guangzhou to Changsta, with just 12,228 vehicles sold so far this year coming nowhere near the combined factory output of 328,000 units annually.

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The Jeep Compass is one of the brand's four vehicles available in China

A statement from GAC outlined the reason behind the closure, saying it is to "increase (the) utilisation rate of plants and lower cost". Essentially, the Changsta factory's yearly output of 164,000 vehicles a year is significantly greater than the sale rate of Stellantis's vehicles in China.

While the Stellantis-GAC joint venture has only just exceeded 12,000 sales of Jeep SUVs, the Stellantis and Dongfeng partnership has seen greater success, with 47,788 sold from January to July – although this second alliance has also had to consolidate its resources, closing two factories due to overcapacity.

Despite the struggles in South-East Asia, Stellantis CEO Carlos Tavares said he plans to bring Opel to China in the near future, looking to sell its line-up of electric vehicles.