Carlos Tavares has had enough of interfering government officials.
Stellantis-owned Jeep has taken the decision to shut its only factory in China over increasing political concerns, said CEO Carlos Tavares. This follows an announcement that the SUV maker would be terminating its 12-year-long partnership with Guangzhou Automobile Group (GAC), a state-owned company that produced Jeeps for the Chinese market.
Speaking to Bloomberg, Tavares said, "We have been seeing over the last few years more and more political interference in the world of business in China." He referred to other automotive brands that, in recent weeks, have suffered because of sanctions in countries such as Russia. "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," he added.
With the invasion of Ukraine still fresh in the minds of car companies, many fear what would happen should China apply similar tactics in Taiwan; the two countries have deep-rooted tensions that stretch back centuries.
However, it's not just escalating hostility that keeps Tavares up at night. The CEO told the news agency that Western vehicle sales have plummeted by a fifth in the first half of 2022, while the uptake of domestic vehicles increased over the same period. Japanese vehicles faired worse and were dealt a double-digit drop.
Tavares previously told reporters that there is an obvious shift in the Chinese car market - a hugely important region for automakers, especially high-end brands like Bentley. "We see that for Western players, selling cars in China is becoming increasingly difficult." He remarked that he's relieved to not be in the shoes of big competitors such as GM and Volkswagen, both of which do big business in China.
The company's CEO did admit that the Jeep/GAC joint venture was not as profitable as hoped, but this wasn't the reason behind the decision. The Chinese Communist Party's (CCP) economic policies - which favor local automakers - and "broken trust" with the GAC are the cause of Jeep's swift exit.
This, however, does not mean Chinese Jeep fans won't be able to get their hands on the American lineup of SUVs. Instead, Stellantis has plans to import electrified vehicles into the country and sell them through the Jeep dealer network. The automaker has employed a similar tactic in Europe, where it has taken the decision to only sell electrified vehicles in the region.
Soon, Jeep will introduce its first-ever battery-powered vehicle, which will reportedly touch down in 2023.
As a reminder, Jeep/GAC produced several models for the Chinese market, including the Compass (pictured below), Renegade, Cherokee, and the Grand Commander, a large SUV not sold in the United States. We're yet to see whether other brands follow suit, but it could cause trouble for the industry as a whole - China remains the world's biggest consumer of new vehicles.