A Brief History of Automobiles: How did GAC Fiat and GAC Jeep get to where they are today?

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On January 27, 2022, Stellantis Group announced that it plans to increase its stake in GAC Fiat Chrysler Automobile Co., Ltd. to 75%. However, GAC Group soon issued an announcement, saying that the two sides had not yet signed a formal agreement on the equity adjustment of GAC FCA.

Then, in late February, Stellantis Group CEO Tang Weishi said during the performance report that he had signed an agreement on increasing his holdings in GAC FCA and would become a majority shareholder of the company.

GAC FCA, which has faded out of people's sight for a long time, once again stood in the spotlight.

So, how did GAC FCA get to where it is today?

▍ Fiat brand: up and down

To talk about GAC FCA, we must first start with GAC Fiat.

In 2009, China surpassed the United States for the first time with a production and sales of more than 13.5 million vehicles, becoming the world's largest automobile production and sales country.

It was also in this year, under the joint witness of the leaders of the two countries, that GAC Group and Fiat Group signed a cooperation framework agreement in Rome, Italy. In November of the same year, GAC Fiat passenger car project laid the foundation stone in Changsha, Hunan Province.

In March 2010, GAC Fiat Automobile Co., Ltd. was formally established, referred to as GAC Fiat, the shareholding ratio of GAC Group and Fiat Group is 50:50, the registered capital is 1.8 billion yuan, and the total investment in the first phase is about 5 billion yuan. According to the plan at that time, GAC Fiat had an annual production capacity of 140,000 units in the first phase and 250,000 units in the second phase.

As far as this plan is concerned, the two sides are still quite spirited.

Before that, people's cognition of Fiat was still stuck on "Nanjing Fiat". However, in December 2007, after Fiat and NANC terminated their joint venture relationship, Fiat has actually withdrawn from China.

Interestingly, during the existence of the relationship with NANQI, Fiat has spread scandals with a number of domestic car companies, including Chery, Changan, and even Zotye. With the establishment of GAC Fiat, this story has finally been settled.

In June 2012, GAC Fiat's Changsha plant was completed, and the first domestic model, Fixiang, rolled off the production line at the same time.

In September, Feixiang was listed in Shanghai.

Born on the Alfa Romeo Giulietta platform, Fiori is a compact sedan. In terms of design, the front face of the domestic Feixiang is replaced by the multi-horizontal stripe large mouth net that the Chinese prefer. So, while the Dodge Drat is a sibling model, the change in the front face makes it difficult to tell their relationship.

The body size (length, width and height 4679× 1850×1471mm, wheelbase 2708mm) are decent, and there is not much advantage over the competition.

Feixiang's interior adopts a simple style, the central control button position is reasonable, the operation is convenient, and the disadvantage is that the plastic feeling is relatively strong.

In terms of power, Feixiang is equipped with a 1.4T turbocharged engine, matching a 6-speed dry dual-clutch transmission, of which the maximum power of the high-power version is 110kW, the peak torque is 230N·m, and the maximum power of the low-power version is 88kW, and the peak torque is 206N·m.

According to some car owners at the time, at about 30,000 kilometers, the turbine of the Feixiang engine was prone to failure, and some strange noises could often be heard when driving. In addition, the 6-speed dry dual-clutch transmission is also full of uncertainties, and some owners have encountered transmission noise or power failure.

Despite this, when it first started selling, Feixiang's sales were still good. Indeed, a lot of beauty is due to lack of understanding.

In 2014, GAC Fiat launched the Zhiyue model.

This car is based on a hatchback version of the Feixiang model, the whole car style is similar to the Feixiang, using the hatchback rear tailgate, the shape, taillight group style has been redesigned; the front face has been changed from three banners on The Feixiang to a banner. In terms of interior, Zhiyue is basically the same as Feixiang, only in the details have been changed.

In addition to the two domestic cars, Fiat has also introduced imported models Boyue, Feiyue and Fiat 500.

In 2014, with The Help of Fixiang and Zhiyue, GAC Fiat sold 68,090 vehicles throughout the year, setting a new high. Under such a good situation, the Guangzhou factory also officially laid the foundation.

However, the peak of GAC Fiat's sales also stayed in this year. In the following days, its sales fell to 31,481 units in 2015, down more than 50% year-on-year; in 2016, sales fell to 12,699 vehicles, down another 60% year-on-year. By 2017, GAC Fiat's annual sales of only 2273 vehicles remained, becoming the bottom of the existence.

At this time, quitting became the best option.

So why would Fiat fold at home again?

There are roughly two reasons for this:

First, the product strength is not strong. This is not difficult to see from the two models launched by Fiat after its return to China. Not only is the pricing high, but also the lack of highlights, although there is an endorsement of the Alfa Romeo product platform, but the reputation of the entire Fiat, whether domestic or foreign, is not ideal.

Second, sales channels are weak. Fiat's sales outlets in a single city can be described as a handful, and most of them still share the network with the Jeep brand in the later period. With the popularity of the SUV market, many dealers have abandoned the Fiat brand, which cannot be sold, and turned to the Jeep brand, which has once again affected the sales of Fiat.

In 2018, the Fiat brand had no choice but to withdraw from the Chinese market again.

▍ Jeep brand: starting from feelings, and finally quality

Let's set our sights on the Jeep brand.

Since 2009, Fiat has signed an alliance agreement with Chrysler and began to gradually acquire Chrysler shares, acquiring 20% of the shares that year, and then increasing its stake in Chrysler to 58.5% on several occasions. Eventually, with the support of the Italian government, Fiat spent $4.35 billion to buy the remaining shares and obtained a 100% stake in Chrysler.

However, the acquisition of shares does not mean that the two companies have merged.

Since February 2014, Fiat has been paving the way for the restructuring of the two companies, but it was not until October of that year that the merger agreement between Fiat and Chrysler came into effect, and the Fiat-Chrysler merger that lasted for more than five years finally came to a successful conclusion.

Of course, this process is also reflected in the joint venture company, GAC Fiat.

In January 2013, Fiat Group, Chrysler Group and GAC Group signed a framework agreement to expand cooperation in the production and sales of passenger cars in China.

According to the agreement, the three parties will increase the production capacity of the GAC Fiat joint venture to meet the demand for more Fiat Chrysler products produced in China in the future. That is to say, after the Fiat brand, more brands under the Fiat-Chrysler Group will be produced by GAC Fiat, and the first to be introduced is the Jeep brand.

In fact, as early as the 1980s, the Jeep brand and the Beijing Automobile Factory joint ventured to establish Beijing Jeep, and its products have become unforgettable memories for many people. However, because Chrysler and Mercedes-Benz separated, Beijing Jeep became Beijing Benz, and there was no longer Jeep's shadow.

In 2015, GAC Fiat officially changed its name to GAC Fiat Chrysler Automobile Co., Ltd., referred to as GAC FCA, also known as GAC FCA.

In the same year, the Jeep brand was domestically produced again, and within two years, it introduced three models: free light, free hero and guide. In particular, the Jeep Free Light, which once grew rapidly in China, became one of the main candidate models.

The data shows that in 2016, the cumulative sales of the Guangfeik Jeep brand in China 129516; in 2017, although no new products were launched, the sales volume still reached 202703 vehicles, an increase of 56.5% year-on-year, creating a stunning "GAC FCA" speed. The advertising slogan of "not all jeeps are called Jeep" has also made many netizens excited Miming. Jeep has also become a typical representative of domestic emotional cars. I also super like this brand and have introduced its products to many friends.

Unfortunately, the Jeep brand quickly followed in Fiat's footsteps.

In 2018, Jeep brand products were exposed to many product quality problems, including burning oil, lying down and so on. Affected by this, the annual sales of the Jeep brand fell to 124512 units, down 38.8% year-on-year.

Although Jeep launched its fourth domestic model Commander this year, it still failed to recover the decline. Even if GAC FCA later adjusted its operating mechanism and implemented integrated operation, it still failed to work, and it still fell and fell.

In 2019, the GAC FCA Jeep brand sold 72,956 vehicles, down 41.4% year-on-year; in 2020, it sold 40,659 vehicles, down 44.3% year-on-year; and in 2021, it sold 20,396 vehicles, down 49.8% year-on-year, with an average monthly sales of less than 2,000 vehicles.

The withdrawal of the Fiat brand and the continuous decline in sales of the Jeep brand have made the financial data of GAC FCA very ugly. Gac Group's financial report shows that in 2017, GAC FCA's net assets peaked at 4.422 billion yuan, and after experiencing continuous losses, in 2020, its net assets became -331 million yuan, and it was insolvent.

According to the 2021 semi-annual report of GAC Group, the net asset loss of GAC FCA continued to expand to 1.438 billion yuan. In three and a half years, GAC FCA has accumulated losses of nearly 6 billion yuan.

For the continuous decline in sales, Mu Anze, president of GAC FCA, said, "In the past, we have been emphasizing the brand's historical heritage, brand heritage, and core values, but in the process we may have forgotten to keep pace with the times and forget to evolve." Sales peaked in 2017, but then there was a problem with the quality of the burning oil, and we did not react well to solve the problem and give the market a satisfactory answer. This matter dragged on for too long and affected the image of our brand. ”

In addition, Mu Anze also pointed out that the Jeep brand has not been able to keep up with the pace of the market in the pace of pushing new products, and has also ignored the core represented by Jeep itself, resulting in its disadvantage in the fierce competition.

▍Can the Jeep brand under the asset-light strategy still be flipped?

At the end of October 2019, the Supervisory Board of PSA Citroën Group and the Board of Directors of Fiat Chrysler Group agreed to achieve a full merger of the two corporate businesses in a 50:50 share ratio. In January 2021, the merger was officially completed, forming a new group: Stellantis.

On the evening of March 1, 2022, Stellantis Group announced the "Dare Forward 2030" strategic plan, in which in the joint venture company GAC FCA segment, Stellantis Group said that it has negotiated with GAC Group to increase the share ratio to 75%, and is waiting for approval by the competent authorities.

It can be seen that the shareholders are trying to change the current situation of GAC FCA. However, the intensity of such efforts appears to be limited.

According to the plan, the Stellantis Group plans to achieve net zero carbon emissions by 2038 and a 50% reduction by 2030. The European and North American markets remain the absolute focus of the Stellantis Group.

In the field of electric vehicles, by 2030, Stellantis Group will have more than 75 pure electric vehicle models, with annual sales of pure electric vehicles worldwide reaching 5 million; in the field of power batteries, Stellantis Group expects demand of 400GWh in 2030, of which 250GWh in the European market and 150GWh in the North American market.

However, the Chinese market, which accounts for more than 60% of global electric vehicle sales in 2021, does not appear in the strategic planning of The Sellantis Group.

Instead, Stellantis Group CEO Carlos Tavares has repeatedly mentioned an asset-light approach to the Chinese market, as well as strengthening the imported car business, including maserati and Jeep brands. This is a far cry from the industry's expectations of Stellantis' new China strategy.

"We are disappointed in the Chinese market." In addition to continuing to show disappointment, Tang Weishi admitted that for the Chinese market, in addition to the "two-bedroom and one-room" plan of DPCA (that is, the Peugeot brand is dominated by Stellantis and the Citroen brand is dominated by Dongfeng Group), as part of the asset-light business model, Stellantis Group will only retain GAC FCA Changsha plant to reduce fixed costs.

In addition to "saving money", Stellantis has obviously not found a way to "make money" in the Chinese market. This also means that the world's fourth-largest car company, which was formed by the merger of PSA and FCA, has gradually drifted away from the Chinese market under the tide of global intelligent electrification.

So, in this situation, how likely do you think Jeep has of turning the tables in China?

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