Jeep Dealers Demand Compensation From Stellantis In China Over Domestic Model Production

Dec. 16, 2022 9:07 AM ET by Jay Traugott Industry News / 3 Comments

Stellantis ended Jeep production in China earlier this year.

Dealerships in China that sold locally manufactured Jeep vehicles are demanding millions in compensation from parent company Stellantis.

The report comes via Reuters, which claims to have seen a letter signed by Chinese Jeep dealerships. The issue dates back to October 2022, when Stellantis filed for bankruptcy for its Jeep joint venture with Chinese carmaker and partner Guangzhou Automobile Group (GAC).

Stellantis has instead decided to go with a purely import business model for Jeeps in the world's largest automotive market. The dealers' letter states that this decision to end the partnership has resulted in forced layoffs and financial losses. A total of 26 dealers signed the letter. Stellantis did not comment on the situation.

All told, these dealers seek compensation of 900 million yuan, which is about $130 million.

They are demanding 18 million yuan ($2.59 million) for each affected dealer to help cover losses that include initial investments, severance payments, refunds for the amounts they already contributed to upgrading their facilities, and even to help pay off sales rebates.

One of the organizers said that the automaker has, so far, refused to pay the "basic bill" that includes some of the items mentioned above to at least 50 authorized dealers. The venture's Chinese shareholder has already agreed to pay dealers 50% of the bill.

Stellantis supposedly refuses to recognize those dealers as authorized sales locations.

2019-2023 Jeep Renegade Front Angle View

2019-2023 Jeep Renegade Rear View Driving

Jeep announced the termination of its 12-year partnership with GAC last August, citing Chinese government interference with its operations. Another concern was the fear of sanctions due to ongoing political and trade disputes between the US and China.

"We have been seeing over the last few years more and more political interference in the world of business in China," said Stellantis CEO Carlos Tavares at the time. "We don't want to be a victim of cross-sanctions as has been the case for other companies in other regions of the world recently."

The Jeep/GAC partnership saw Chinese production of the Compass, Renegade, Cherokee, and Grand Commander, a large SUV not sold in the US.