Stellantis just announced its plan to increase its holdings in GAC FCA, and was "punched in the face" by GAC Group

The troubled GAC FCA made the Stellantis Group and the GAC Group "pinch" again.

On January 27, Stellantis Group announced on its official website that it "plans to increase its stake in the joint venture GAC FCA from the current 50% to 75%" and that "GAC Group and Stellantis have agreed to the relevant procedures for the transaction, but still need to be approved by regulatory authorities." The plan to increase the stake in GAC FCA is also described by The Stellantis Group as "a key element in the global strategic plan to be announced on March 1", and will launch a new model around the "One Jeep" strategy in the future, focusing on the Changsha plant.

But interestingly, on the same day, GAC Group issued a "face-punching" announcement in response to this news: "GAC Group learned from the official website of Sellantis about its release on the equity adjustment of GAC FCA. This announcement is not approved by us, and GAC Group deeply regrets it. Regarding foreign joint venture cooperation, GAC Group will strictly abide by national policies and regulations and promote it in accordance with the principles of mutual trust and win-win results. ”

This is not the first time that GAC Group has issued a response to the issue of GAC FCA's share ratio. As early as September 2021, GAC Group had publicly responded to the media on the news that "it has negotiated with Stallantis Group to transfer 20% of the shares of GAC FCA", saying that "there is no news in this regard at present, please refer to official information".

It is reported that in recent years, due to the great difficulties in the operation of GAC FCA, GAC and Stellantis have had to conduct in-depth communication and consultation on their joint venture and cooperation and the brand revitalization of GAC FCA.

According to public information, GAC FCA was established in March 2010 by GAC Group and Stellantis Group (formed by the merger of FCA and PSA) with a 50:50 share ratio, with a total investment of about 17 billion yuan. In 2015, THE GAC FCA localization project was gradually landed.

In 2016, GAC FCA successively launched three SUV models in the Chinese market, Nametour, Free Light and Liberty Hero, and achieved sales of 179,900 units, an increase of 260% year-on-year.

In 2017, GAC FCA sold more than 220,000 vehicles, an increase of 57% year-on-year. However, at that time, there were public reports that some dealers revealed that GAC FCA's growth in 2017 was through the pressure of inventory on dealers, but such voices were not taken seriously under the sharp growth results of two consecutive years.

In 2018, a conflict broke out between GAC FCA and its dealers, with sales plunging 38.99% year-on-year to 125,100 units.

In 2019, a large number of quality problems broke out after the localization of GAC FCA JEEP and further collapsed the reputation. This year, GAC FCA sales fell to only 73,900 units.

In 2020, GAC FCA was incurable, with its cumulative sales of about 40,000 cars, down 45% year-on-year. Moreover, in 2020, GAC FCA's production capacity during the reporting period was only 38,600 units, and the capacity utilization rate was only 11.77%. In addition, some reports quoted employees of GAC FCA's Changsha plant as saying that the factory is on holiday for more than half a year, and the working time in 2020 will not exceed 180 days at most.

In 2021, GAC FCA sold 20,100 vehicles, down more than 50% year-on-year. In the past few years, GAC Group and Stellantis Group have repeatedly "transfused blood", but they still cannot reverse the decline in sales of GAC FCA year after year. According to public reports, in March 2020, GAC Group officially announced that it would lend 500 million yuan (distributed by share ratio, a total of 1 billion yuan for both shareholders) to use the cash flow of GAC FCA's daily production and operation; in July this year, GAC Group once again announced that it would increase its capital by 1.5 billion yuan to GAC FCA (distributed by share ratio, a total of 3 billion yuan for both shareholders), and also provided a loan of 250 million yuan to GAC FCA. In other words, the cumulative capital increase in more than a year has reached 4 billion yuan, which also means that the shareholders of both sides do not want to give up GAC FCA, nor do they want to give up China, the largest automobile consumer market.

However, its two major factories in Changsha and Guangzhou have a capacity utilization rate of less than 12% in 2020 and are falling further in 2021. How to save GAC FCA and effectively curb its downward momentum has become the biggest problem that GAC and Stellantis must face together.