(Bloomberg) — Stellantis NV’s state-owned Chinese partner accused the European company of disrespecting customers in the world’s biggest auto market in an escalation of a dispute over their failed Jeep venture.
Most Read from Bloomberg
Guangzhou Automobile Group on Friday said comments Stellantis Chief Executive Officer Carlos Tavares made the previous day on how trust had broken down between the two companies over their Chinese manufacturing partnership were “unbelievable.”
Several Stellantis ventures “failed to achieve success, which is the result of a lack of respect for customers in the Chinese automobile market,” GAC Group said in a statement.
The latest twist in the months-long back-and-forth comes after Tavares on Thursday during earnings presentations and an interview with Bloomberg Television flagged growing risks of operating factories in China because its politicians are increasingly meddling in business.
Stellantis announced last week it would shutter its only Jeep factory in China, saying it was a loss-making enterprise best replaced with imports. Jeep is exiting as more established foreign auto brands have struggled to maintain their share of the market, raising questions about their long-term future in China.
Read more: Jeep Pulls Out of China Over Government Meddling in Business
The joint venture “has not been able to establish a mutually trustworthy operating mechanism adapted to the highly competitive environment in China in order to turn the adverse situation of continuous losses in recent years,” GAC Group said.
While Tavares acknowledged that the business was racking up losses, he said the company’s reasons for leaving ran deeper. The decision was rooted in “broken trust” with its local partner, as well as Chinese policy favoring the emergence of local brands, he said.
While Stellantis had signed a deal to raise its stake in the GAC joint venture to 75%, GAC Group “did not do what it was supposed to do,” Tavares said. “So we considered that it was better to unwind.”
A spokesman for Stellantis said an agreement to proceed to filing was signed by the company and GAC Group in February; he declined to comment further on the statement.
The Chinese group said it didn’t file paperwork because there was “no consensus on relevant agreements,” and that Stellantis was the party not fulfilling its commitments.
The venture had produced the Jeep Cherokee, Renegade, Compass and Grand Commander models primarily for the China market. Stellantis will instead ship an electrified lineup of different Jeep vehicles to its dealers in the country.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.