The head of carmaker Stellantis has warned about growing Chinese government interference in western businesses operating in the country, days after the company ditched its joint venture to manufacture Jeep vehicles there.
Carlos Tavares said the “interference of the political agenda has been increasing by the day”, and said that rival carmakers with plants in the country could even lose them if the world “fragments” and China becomes embroiled in a sanctions stand-off with western nations.
“There is growing political interference in the way we do business as a western company in China,” Tavares said.
Stellantis, which was formed by the merger of Jeep owner Fiat Chrysler and Peugeot owner PSA last year, has long struggled in China, while rivals such as Volkswagen and General Motors have made significant profits from the country.
Last week Stellantis dissolved a joint venture with Guangzhou Automobile Group, which ran a factory building Jeeps in the country, a reversal of its previous plans to increase its involvement in the business. The company booked a €297mn accounting charge in its half-year profits from the decision.
The move leaves Jeep, Stellantis’s most successful global brand, reliant on expensive imports into the world’s largest car market.
Tavares said the decision was “visible” proof of political interference.
Stellantis “signed a binding MOU [memorandum of understanding] with our partner GAC in China”, he said. “For reasons that are hard to understand, our partner who had signed the MOU did not want to execute the MOU and preferred to be in breach.”
As a result, “trust was broken and we had to unwind the operations”, he said.
GAC did not respond to a request for comment.
The question of how to navigate business in China, which for many carmakers is one of their largest profit sources, has moved up the agenda this year.
After Russia’s invasion of Ukraine, several carmakers privately raised fears that pulling out of the market might set a precedent that forced them to abandon Chinese operations if the country ever takes military action against Taiwan.
Tavares said Stellantis’s “asset lite” approach to China of importing vehicles rather than building locally was the best way to operate for the future, and the company had no plans to seek to open factories.
He cited the examples of Russia and Iran, where Stellantis was forced to close some operations because of sanctions. “We are learning from experiences in a fragmented world,” he said.
“When geopolitical tensions grow and end in cross-sanctions, if you have a business in the two countries that are opposing in cross-sanctions, you have to choose,” Tavares added. “One bloc or the other bloc.”
He said carmakers with significant Chinese plants — which include VW, GM and Tesla — would be “heavily vulnerable to that situation if that materialises”.