Carlos Tavares denounces the “politics of the business situation in China”

Carlos Tavares denounces the “politics of the business situation in China”

It is a break in the international teachings of the Stellantis group… For Carlos Tavares, it is time to draw conclusions from the new geopolitical situation. To the chaos of the world that I have been talking about for several years, we must now add its division », explained the boss of Stellantis. The war in Ukraine was the culmination of a deterioration in international relations, but which already had its roots in the past.

“Breach of trust”

This is the Chinese case that has you largely took the remarks of Carlos Tavares in front of the press, besides the presentation of the financial results. At the beginning of the year, he announced his intention to acquire up to 75% of the joint venture capital with the local GAC group that manufactures and sells the Jeep brand in China. Except that the file is not advanced. We had entrusted Gac with the responsibility of bringing the file to the central administration (…) Our partner never delivered this file. »he was touched and added it was a cause of breach of trust ».

Stellantis is reorganizing its operations in China and ceasing Jeep production

For Carlos Tavares, in China, which is the largest car market in the world with 28 million new cars per year, The business environment has become political in recent years ». And mention the decline in sales of Western groups, compared to the commercial performance of Chinese groups. Selling cars in China is becoming increasingly difficult », commented. According to him, this trend has its roots in the doctrine of the Chinese Communist Party, laid down in 2010: everything is written in this document ».

The Jeep will now be exported

From now on, Carlos Tavares prefers to work through a new style called asset light strategy », in French, the reduced asset strategy. In the case of Jeep, it is a matter of closing the factories in China as well as the joint venture to continue the transportation of vehicles there.

We feel the growing tension and fear that they will lead to sanctions that will ultimately affect Western companies », he explained before mentioning the case of Iran which cut off the PSA group of around 400,000 cars per year, or on another level, the case of Russia which brutally deprived its competitor, the Renault group, of its second largest market in the world and the fruits of its investment right there. Besides asset light strategy »Stellantis will then protect its investment.

This is a real success for Carlos Tavares who has been favoring local production to win international markets. In China, it has been facing for almost five years the fall in sales of its products sold there and which has never found a solution. Until now, he questioned the operational implementation problems due to his internal partners, but he never mentioned this political trend.

What solution for Peugeot and Citroën?

Stellantis has not yet resolved the issue of Peugeot and Citroën which have been industrialized through DPCA, a joint venture with DongFeng Motors but whose sales have declined. This joint venture includes no less than three factories that produce cars for the European market such as the DS9 or the new Citroen C5X. However, it will have to find a way out of these two brands, which cannot fly in China, and therefore find an agreement with DongFeng Motors, which still holds 3% of the capital of Stellantis.