With the dismantling of Dongfeng Peugeot Citroen Automobile (DPCA) and the increase in the stake in GAC Fiat Chrysler Automobiles (GAC FCA) despite the public contradictions with its partners, Carlos Tavares continues to save the business in China that still “disappoints” him.
“In the Chinese automotive market, Stellantis will focus on an asset-light model for profitable growth, with the goal of reaching 20 billion euros in revenues for the Group’s operations in China by 2030.” This is the future that Tavares, CEO of the Stellantis Group, has outlined for the Chinese market in his “Dare Forward 2030” strategy, launched on March 1.
Stellantis Group is the fourth largest automotive group in the world, created by the 50:50 merger of PSA Group and Fiat Chrysler Group (FCA), and was established in January 2021. Its current operations in China are mainly the result of the joint ventures that each of the PSA and FCA groups have had in China since then, namely DPCA Automotive and GAC FCA.
On March 1, it announced a strategic plan called “Dare Forward 2030”, and the part on China business is of great interest. It can be seen that Stellantis Group will make significant adjustments to DPCA and GAC FCA by means of brand restructuring, production capacity adjustment, sales and service changes, share ratio adjustment and many other means.
In fact, there is no specific data disclosed on Stellantis Group’s revenue in China, as China’s results are included in the calculation combined with India and the Asia Pacific in Stellantis Group’s full-year 2021 financial report. What is known is that the net revenue of China, India and the Asia Pacific in 2021 is only 3.98 billion euros, accounting for less than 3%. By way of comparison, the two regions of Europe and the United States account for 87% of the Stellantis Group’s net revenue. However, Tavares mentioned that in the future, more than 25% of the Group’s net revenue will come from markets outside Europe and North America.
Tavares explained to the media that starting in 2022, the DPCA plant will be open to third parties, and the Stellantis Group will only be is responsible for managing the sales of the Peugeot brand and the Dongfeng Group manages the sales of the Citroen brand. In addition, GAC FCA, for its part, has implemented the One Jeep strategy by selling the assets related to the Guangzhou plant and keeping only the Changsha plant.
It is reported that the second plant of DPCA Motors located in Wuhan Economic and Technological Development Zone has been taken over by Dongfeng Honda, which will be transformed by Dongfeng Honda into a brand new plant dedicated to the production of pure electric models. According to another media report, GAC FCA’s Guangzhou plant will be transferred to GAC Aion as its second plant.
Both DPCA and GAC FCA are currently at a low point in their development, and the sales in China are undoubtedly disappointing for Tavares. Even though DPCA’s sales in China doubled last year, the combined sales of the two Stellantis Group joint ventures in China were only 120,700 units, less than 2% of the Group’s total sales (6,142,200 units), and even GAC FCA’s sales are still in decline, down 50.33% year-on-year.
In order to enhance the competitiveness of Stellantis Group in China, Tavares also further confirmed in its long-term strategic plan that it will “adopt the One Jeep strategy for GAC FCA’s Jeep brand, aiming to make Jeep the number one off-road SUV”, increase its shareholding in GAC FCA to 75% and adopt a ” two bedrooms and a living room” business model for DPCA cars, with Peugeot and Citroen being led by the French and Chinese sides respectively, and public resources such as technology, manufacturing and production being shared by both sides.
However, the Stellantis Group’s move to increase its share in GAC FCA to 75% has brought its conflict with the two partners into the open. As early as January 27th of this year, Stellantis Group announced on its official website that it planned to increase its shareholding in GAC FCA from 50% to 75%. Subsequently, the GAC Group stated that “this announcement has not been approved by us”.
Through the series of strategic adjustments announced by Tavares, it seems that Stellantis is indeed interested in saving the performance of the Chinese market, but it seems that Stellantis Group is not taking the Chinese market seriously at the moment, after all, electrification is one of the most important issues in Stellantis’ ten-year strategy, but there is no trace of China, a market that almost all traditional multinational car companies are eager to enter.
In its “Dare Forward 2030” strategy, Stellantis proposes to become an industry leader in the fight against climate change and to achieve net-zero carbon emissions by 2038. and 50 percent of all cars sold in the United States will be purely electric. According to the plan, by 2030, the group will have more than 75 all-electric models and will sell 5 million all-electric vehicles worldwide annually.
This again makes people wonder whether it is not the right time or the significance of the Chinese market for Stellantis is not that important in Tavares’ planning. Source