AutoBeta(AutoBeta.net)01/28 Report--

On the afternoon of January 27th, Stellantis Group announced on its official website that it plans to increase its stake in the joint venture Guangzhou Auto Fick to 75% from the current 50%. GAC GROUP and Stellantis Group have agreed to the relevant procedures of the transaction, but still need to be approved by regulators.

However, GAC GROUP issued a "hit in the face" announcement that night. GAC GROUP said in the announcement: "GAC GROUP learned of its announcement on the equity adjustment of Guangzhou Auto Fick from the official website of Stellantis, which has not been approved by us, and the two sides have not yet signed a formal agreement on the equity adjustment of Guangzhou Auto Fick. With regard to foreign joint ventures and cooperation, GAC GROUP will strictly abide by the national policies and regulations and promote it on the principle of mutual trust and win-win results.

In recent years, Guangzhou Auto Fick has encountered great difficulties in operation. Data show that Guangzhou Auto Fick was established on March 9, 2010. it was jointly invested by Guangzhou Automobile Group Co., Ltd. and Fiat Group Automobile Co., Ltd. at 50:50. The company's headquarters is located in Changsha Economic Development District, Hunan Province. at present, it has two major vehicle production bases, Changsha factory and Guangzhou factory, with an overall design capacity of 328000 vehicles. In 2013, Fick Group and GAC GROUP signed a framework agreement to expand the production and sales of passenger cars in China, and confirmed that the Jeep brand is domestic. In August 2020, Fick Group and GAC GROUP injected 1 billion yuan into Guangzhou Auto Fick. In July 2021, Stellantis Group and GAC GROUP once again injected 3 billion yuan into Guangzhou Auto Fick.

However, despite continuous financial support, Guangzhou Auto Fick's sales have not been satisfactory in recent years. Data show that GAC Fick's sales have been falling since it reached a peak of 205200 vehicles in 2017, with sales of 125200, 73900 and 40500 vehicles respectively from 2018 to 2020. According to sales data disclosed by GAC GROUP, GAC Fick's cumulative sales in 2021 were 20123 vehicles, down 50.33% from a year earlier.

It is understood that at present, Guangzhou Auto Fick has a total of five models on sale, including the Compass, Big Commander, Free Light, Liberty Man, and Commander PHEV. Among them, the Compass is the sales pillar of the Jeep brand, with sales of 11796 vehicles in 2021, accounting for more than 50% of the total sales. Some market analysts believe that the halving of GAC Fick sales in 2021 is directly related to the repeated epidemic situation and chip shortage, but the automobile industry is concerned that the real reason for the decline of GAC Fick should be attributed to its quality control, especially in 2018. It was complained by many car owners for burning engine oil and was named and exposed by CCTV Finance. That year's sales suddenly fell from 205200 to 125200. The problem that manufacturers are indifferent to consumers, especially when it comes to the unqualified quality of the core parts of the car, has an impact on the reputation of manufacturers and the reputation of their products. In addition to the continued decline in sales, GAC Fick is also in financial crisis. In the past three years, the cumulative net loss of GAC Fick is close to 5 billion yuan, and the net worth of GAC Fick in 2020 is-331 million yuan.

On September 8, 2021, Stellantis Group issued a statement saying that after the discussion between Stellantis Group and GAC GROUP's shareholders, GAC Feike Joint Venture will focus on its production in Changsha plant in order to improve the capacity utilization of the plant, further reduce enterprise operation and maintenance costs, improve the management efficiency of the joint venture company, and effectively enhance the comprehensive competitiveness and profitability of the enterprise. Both shareholders will provide full support to the steady and orderly progress of related work, especially the proper placement of employees.

Guangzhou Auto Fick's plant in Guangzhou, Guangdong Province will be shut down. According to GAC Fick's internal employees to the media, the existing employees of the Guangzhou plant will be compensated in the form of "buyout seniority". In addition, the capacity utilization rate of the Changsha plant is not high at present, and many workers are on vacation at home, the longest of which is as long as half a year, and the factory is still laying off staff, unable to place redundant staff.

With sales plummeting and insolvent, will GAC Fick become the next Dongfeng Renault? The automobile industry is concerned that China, as the world's largest automobile market and new energy vehicle market, has an important position in the global market, and any car company will not easily give up the Chinese market. At present, although the development of Guangzhou Auto Fick in the market is not optimistic, it has not yet reached the stage of launch, and the STELLANTIS Group plans to increase its shareholding ratio to 75%, which confirms the importance of the Chinese market to the STELLANTIS Group and is unwilling to give up the Chinese market.

With the full liberalization of the foreign equity ratio policy in the automobile industry, some new adjustments will begin to appear gradually, but in fact, due to Guangzhou Auto Fick's losses for many years, it has brought greater pressure to GAC GROUP, and the Stellantis Group can also let go if it has more controlling shares. Although STELLANTIS plans to increase its stake in Guangzhou Auto Fick to 75%, which is an "own incident" for the time being, it does not mean that the future will not become a reality.

In addition, Stellantis said on its website that increasing its stake in Guangzhou Auto Fick to 75 per cent was part of a strategic plan to be announced on March 1, the first step towards rationalising its Chinese operations. According to media reports, the new strategy to be announced by Stellantis may also involve a change in the stock ratio of another joint venture company, DPCA. According to reports, the Dongfeng Peugeot brand of DPCA is controlled by foreigners, which increases its capital and shares to 75%, while the Dongfeng Citroen brand is controlled by the Chinese side, and the Chinese side increases its shares to 75%. However, the plan has not been officially confirmed.

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