GAC Group and Stellantis JV Bankruptcy Triggers Dealers’ Rights Protection Campaign

The bankruptcy of GAC-FCA, a joint venture established by Netherlands-based automaker Stellantis and China’s GAC Group, in late October triggered a dealers’ rights protection campaign.

Twenty-six GAC-FCA dealers sent letters to the local governments of Guangzhou and Changsha to defend their rights. In the letters, the dealers put forward four demands, including resolutely resisting the bankruptcy liquidation of GAC-FCA before solving the problems of the dealers and customers, and refunding deposits paid by dealers.

At present, GAC-FCA has more than 100 4S stores in China. The total amount owed by GAC-FCA to dealers ranges from 500,000 yuan ($70,771) to nearly 10 million yuan ($1,415,388).

Some dealers said that, at present, many GAC-FCA’s buyers failed to uphold the warranty, maintenance, and their advance payment, leading to complaints to dealers and local regulatory authorities.

Another dealer said that he invested in about 10 million yuan to start a GAC-FCA store in June 2021 with an authorization period until 2026. But before the bankruptcy, there were no cars in the factory from February this year.

GAC-FCA has gone downhill since 2018. Sales volumes have dropped from 222,300 vehicles in 2017 to 20,100 vehicles in 2021 and as of the beginning of this year, GAC-FCA began to slow production. GAC Group’s production and sales report shows that GAC-FCA produced and sold 35 vehicles and 134 vehicles in February, which is a sharp drop compared with that in January. In March and May, the production and sales of GAC-FCA were only one vehicle, and in April and June, the production and sales were zero.

GAC-FCA has become another victim of Stellantis’ “light assets” strategy in China. In July, Stellantis said that it would operate in the Chinese market in a light asset manner, focusing on the Jeep brand and increasing investment in electric vehicles.

Stellantis also mentioned the “light assets” strategy in the “Dare Forward 2030” plan in March. For the Chinese market, the strategy was to reduce fixed costs and achieve a net revenue of €20 billion.

SEE ALSO: Stellantis to Grow Jeep Brand in China With Asset-Light Approach

At present, Dongfeng Peugeot Citroën Automobile Co., Ltd (DPCA), is the only joint venture formed by Stellantis in China. The JV was established by Stellantis together with the Dongfeng Motor Corporation. Because of the bankruptcy of GAC-FCA, the fate of DPCA has attracted much attention. From January to October this year, DPCA sold 105,000 vehicles, achieving 70% of the annual sales target of 150,000 vehicles. On November 9, DPCA held a supplier communication meeting. It was said at the meeting that Stellantis will launch a new model for DPCA in 2023 and strive to launch more newer vehicles in the next few years.