According to Bloomberg’s article published on October 18, 2022, one of the world’s biggest carmakers is rethinking whether making vehicles in China is worth the potential costs as governments push for more self reliance.
The maker of Jeep and Peugeot cars may stop making cars in China as geopolitical differences widen and western manufacturers cede market share to domestic rivals in the world’s largest auto market.
Stellantis CEO Carlos Tavares said Monday the company may pursue an “asset-light” strategy for those two brands in China, using the same phrase to describe the company’s exit earlier this year from its only Jeep plant there. Stellantis’ Opel unit said last month it’s pausing a planned expansion in China.
After decades of western brands dominating the Chinese market, that position is increasingly under threat.
More established foreign brands have also grappled with trying to maintain their positions in China’s car market. Business for Volkswagen and GM is becoming more challenging as local manufacturers including BYD and Geely roll out a slew of electric models.
Some four decades ago, Beijing paired local companies with international players to help develop an auto industry. These partnerships are undergoing changes to keep pace with President Xi Jinping’s push for China to become more self-sufficient.
Manufacturers are increasingly taking into account the potential fallout from the battle for global supremacy that currently features Russia attacking Ukraine. The wider concern is whether the growing list of sanctions targeting Moscow because of its invasion would ever apply to China.
Staying in China
Meanwhile, other automakers are doubling down their China plans. BMW is shifting production of electric Mini hatchbacks from the UK to the eastern province of Jiangsu, and also will assemble a small sport utility vehicle in the country through its partnership with Great Wall Motor.
But even foreign carmakers that have done well in China have been losing ground. VW’s sales slid to 3.3 million in 2021. Deliveries have continued downward, falling 20% to 1.47 million in the first half of this year amid production disruptions.
Still, the company is sticking to its annual sales target of 3.8 million as pent-up demand drives a rebound in sales and, to lessen its dependence on China, is building out its US presence.
For politicians from Brussels and Beijing, companies may not have much choice depending on how heavily economic independence is seen as a virtue.
Washington is taking aim at China’s access to US high-tech gear like semiconductors — pushing “all-in” in the parlance of poker players, according to Foreign Policy magazine.
“The decisive American gamble: to openly block China’s path to become an advanced economic peer, even at significant risk to U.S. and allied interests,” wrote Jon Bateman, a senior fellow in the Technology and International Affairs Program at the Carnegie Endowment for International Peace.
In his keynote Sunday to the 20th Congress of the Chinese Communist Party, Xi made a case for greater controls on supply chains.
In a paper circulated this week, the European Union’s foreign policy arm warned of the EU’s dependence on Chinese products as a “strategic vulnerability” and urged diversification of supply chains for critical technology, such as semiconductors, as well as critical raw materials.
