Stellantis announced plans to increase its stake in Guangfiq to 75%, which GAC Group did not deny

On January 27, Stellantis Group announced on its official website that it plans to increase its shareholding in GAC FCA, a joint venture with Guangzhou Automobile Group Co., Ltd. (hereinafter referred to as "GAC Group"), from 50% to 75%, and THAT GAC Group and Stellantis have agreed to the relevant procedures for the transaction, but still subject to regulatory approval.

This morning, GAC Group responded to the first financial reporter: "GAC Group learned from the official website of Stellantis 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 promote in strict accordance with national laws, regulations and policies, adhering to the principle of mutual trust and win-win results. ”

It is worth noting that gagac group's response did not positively deny the information that the foreign party increased its share to 75%, only saying that this release was "not approved by us".

An insider of GAC Group told reporters that in the first quarter of 2021, Stellantis and GAC Group launched negotiations on the adjustment of the stock ratio, and there were preliminary results in the third quarter of last year. During the negotiation process, GAC FCA began to dispose of its assets and reduce corporate debts, including transferring the special production equipment of GAC FCA's Guangzhou plant to the Changsha plant, and selling welding equipment, robots and other general equipment and venues to other joint ventures of GAC Group.

According to the announcement of GAC Group, Guangfeik was established in 2010 and reached a peak sales volume of 205,000 units in 2017, and since then sales have continued to fall off a cliff. In 2020, GAC FCA sold only 40,000 cars, and its net assets fell from 1.336 billion yuan at the beginning of the year to -331 million yuan, insolvent. In 2021, GAC FCA sales fell further to 20123 units.

In September 2021, GAC Group released information that GAC FCA Guangzhou Plant will complete the transfer of main production line equipment to changsha plant and the classification and disposal of other assets within 2021; by March 2022, it will complete the cancellation of "GAC Fiat Chrysler Automobile Co., Ltd. Guangzhou Branch". Prior to the disposal of the Guangzhou plant, GAC FCA had two vehicle plants with an annual production capacity of 164,000 units at the Changsha plant and a Guangzhou plant, as well as an engine plant with a total production capacity of 328,000 units, with a capacity utilization rate of only 6% in 2021.

At the same time, the first financial reporter learned that DPCA, a joint venture between Stellantis and Dongfeng Motor Group, is also negotiating equity adjustments, and has a preliminary plan.

People close to dongfeng motor executives told reporters that Stellantis Group, a foreign shareholder of Dongfeng Motor and Dongfeng DPCA, has set up a working group to negotiate the adjustment of Dongfeng DPCA's equity. The current plan is for a foreign party to hold 75% of the equity of dongfeng Peugeot brand under Dongfeng Peugeot Automobile, and the Chinese side to hold 75% of the equity of Dongfeng Citroen brand. As for whether DPCA will retain the original equity ratio and transform into a foundry, or split into two joint ventures, Dongfeng Peugeot and Dongfeng Citroen, there is no conclusion.

The reporter noted that in 2017, before the merger of Stellantis, Peugeot Citroen and FCA Group had 3 joint ventures in China, namely DPCA, GAC FCA and Changan Peugeot Citroen, with annual sales of about 1 million vehicles, a total of 7 factories, and a total production capacity of about 1.5 million vehicles.

2017 was the inflection point of Stellantis' performance in China, the three joint ventures have successively experienced operational difficulties, and Changan Peugeot Citroen sold to Baoneng Automobile in 2019 after 6 consecutive losses. By 2021, Stellantis's total sales in China will only be about 120,000 vehicles, of which more than 80% will come from DPCA. According to the data of the Association, DPCA will sell 100,600 vehicles in 2021, an increase of 100.07% year-on-year.

In April last year, Stellantis Group Chief Operating Officer (COO) Olivier said in an interview with First Financial Reporter that Stellantis Group has set up a special research group to study the future strategy in the Chinese market, and the Group's global CEO Tang Weishi will announce this strategy at the end of 2021 or early 2022.

"We don't accept failure in the Chinese market, it's not just about sales and market share, but more importantly, a lot of innovation in the global automotive industry is happening in China first." Losing the Chinese market will result in the Group being in a passive position in competition in other markets around the world. Olivier said.

In yesterday's announcement, Stellantis also said that the increase in GAC FCA's stake is the first step in the rationalization of China's business, and that it is part of the strategic plan announced on March 1 this year, and more details about the Plan for the Chinese market are expected to be announced in the Global Strategic Plan on March 1.