Chinese dealers seek compensation over Stellantis Jeep failure

6:14 am Wednesday, December 14th, 2022

SHANGHAI (Reuters) – Chinese dealers that sell China-made Jeep cars are asking Stellantis for millions of dollars in compensation after the automaker stopped producing the brand in China, according to a letter signed by the dealers seen by Reuters.

Stellantis is overhauling its strategy in China after agreeing to file for bankruptcy of its Jeep joint venture with local partner Guangzhou Automobile Group (GAC) in October.

Stellantis has since said it would pursue an import-based business model in China.

Its “unilateral” decision to terminate the partnerships with the dealers has caused their businesses to make losses and led to layoffs, according to the letter signed by 26 dealers as of Tuesday.

Stellantis declined to comment on the subject, but said in emailed comment it abides by Chinese law and that its joint venture’s bankruptcy application was going through local court proceedings.

GAC declined to comment.

Cao Wei, president of Lianyungang Xuncheng Auto Sales and Service Co., and one of the letter’s organisers, told Reuters that more dealers would join the petition and estimated they would ultimately seek total compensation of 900 million yuan ($130 million) from Stellantis.

They are asking Stellantis to pay them 18 million yuan for each store affected to cover the losses including initial investments and severance payments and to refund their deposits and pay sales rebates, the letter showed.

Cao said Stellantis had refused to pay what he called the “basic bill”, which includes deposits and sales rebates, to at least 50 dealers who were authorised by the joint venture to sell the locally produced Jeep vehicles in China.

The Jeep joint venture’s Chinese shareholder had agreed to pay 50% of that bill to all dealers, but Stellantis had refused to pay the rest, as it did not recognise them as its authorised dealerships, Cao said.

($1 = 6.9523 Chinese yuan renminbi)

(Reporting by Zhang Yan, Brenda Goh in Shanghai and Giulio Piovaccari in Milan; editing by Barbara Lewis)