GAC Fiat Chrysler Declared Bankrupt, Marking Jeep's Official Exit from China

GAC Fiat Chrysler Automobiles Co., Ltd. (GAC FCA) has officially entered bankruptcy proceedings, three years after announcing its withdrawal from the Chinese market. On July 8, the administrator of GAC FCA filed for bankruptcy with the Intermediate People’s Court of Changsha, citing the company's inability to undergo restructuring. The court had already approved the Bankruptcy Property Distribution Plan on June 27, with the first creditors’ meeting held on the same day, signaling the start of substantial liquidation procedures.

The court determined that GAC FCA could not repay maturing debts and its assets were insufficient to cover its liabilities, while also lacking the conditions for reorganization or settlement. As of September 30, 2022, the company held total assets of 7.322 billion yuan, total liabilities of 8.113 billion yuan, and a negative net asset value of 791 million yuan. Between August 2020 and July 2021, Stellantis Group and GAC Group had jointly injected 4 billion yuan into the company as part of a revitalization plan, but the financial condition failed to improve.

In January 2022, Stellantis unilaterally announced plans to increase its stake in the joint venture from 50% to 75%, which GAC Group refuted, leading to a breakdown in cooperation. By July 2022, Stellantis officially terminated the joint venture and announced plans to promote the Jeep brand in China through a light-asset strategy. GAC FCA, once the exclusive Jeep JV in China, had peaked in 2017 with 222,300 vehicles sold but saw continued decline, with 20,100 units sold in 2021 and only 1,861 in the first half of 2022.

As of September 2022, GAC Group held creditor claims of approximately 1.035 billion yuan and is expected to prioritize employee resettlement funds in the liquidation. Stellantis stated that after-sales service for Jeep owners in China will continue through import channels. The administrator has reached a preliminary agreement with service providers, subject to approval by the creditors' meeting.