Carlos Tavares, chief executive officer of the Stellantis group, has raised questions about the viability of car production in China.
For years, the Celestial Empire was viewed as a lucrative hub for Western automakers. Those who managed to establish a foothold there reportedly enjoyed substantial profits, painting a picture of easy gains for global brands. Yet the landscape has shifted. In today’s market, even the biggest names in the industry see challenges, and only a few leaders, including Tavares, are openly addressing them.
According to Tavares, Stellantis no longer finds automobile manufacturing in China profitable under its current asset optimization strategy. The company is actively reviewing its footprint and considering reductions in its number of production facilities as part of a broader arrangement to improve efficiency and returns.
Speaking in Paris, Tavares warned that if the strategy proceeds unaltered, the necessity for factories in China could diminish significantly.
Recent moves by Stellantis illustrate this shift. The Jeep brand has announced its withdrawal from its Chinese joint venture with the state-owned Guangzhou Automobile Group (GAC) and the impending closure of its 12-year-old factory. This development signals potential steps that other Stellantis brands, including Peugeot and Citroën, may follow, depending on evolving conditions in the market and the policy environment.
The underlying reasons
Tavares pointed to a growing degree of government involvement in business decisions as a key factor behind Jeep’s strategic move. He also cited gaps between what the local partner GAC promised and what has actually materialized, alongside broader geopolitical tensions that influence corporate planning.
“We want to avoid becoming victims of cross-sanctions, as has occurred to other companies in various regions,” Tavares noted. The ongoing friction between China and Western economies is shaping risk assessments and investment strategies across the industry.
As tensions rise, the calculus for manufacturing localization shifts. The possibility of shifting production to other regions—such as India—has been contemplated. Producing electric vehicles there for European markets could leverage favorable labor costs, among other factors. While Stellantis continues to evaluate this option, a definitive decision has not been reached.
Competitive dynamics
Tavares emphasized that local competition represents a real challenge. Brands like Geely, BYD, and GAC have advanced in quality, technology, and electric propulsion, occasionally surpassing European manufacturers in battery systems, software, and overall vehicle performance. This competitive pressure underscores the urgency for Stellantis to reassess its global manufacturing strategy and its ability to maintain scale, profitability, and technological leadership in a rapidly evolving market.
Source: auto-motor-und-sport.de
A picture: Depositphotos
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