Stellantis can switch from China to India
Tavares: E-cars from India to Europe
CEO Carlos Tavares has already cast doubt on car manufacturing in China. India can benefit from withdrawal.
For a long time, China was considered an aspirational destination for the western auto industry. Anyone who gets a chance there has a license to print money – at least that’s what it seems. However, long-term profitable business is no longer as easy in the world’s largest car market as it was a few years ago. More and more developers are realizing this, but only Stellantis boss Carlos Tavares seems to be open about it.
On the sidelines of the Paris Motor Show, the Portuguese surprised the media by thinking out loud that they no longer want to produce cars in China. This is related to the “asset light” strategy that Stellantis is currently pursuing. Companies structured in this way have only a small amount of fixed assets on their balance sheets, for example in the form of real estate. Which could mean for the car maker to own fewer factories. “If we continue to implement this strategy, then we don’t need plants in China,” said Tavares in Paris; not sure if they are necessary.
Jeep has closed its Chinese factory
It was already clear at the end of July that Tavares would not avoid taking such a step. At the time, Jeep’s Stellantis brand announced that it would withdraw from its Chinese joint venture with state-owned Guangzhou Automobile Group (GAC) and close the plant that had been in operation for twelve years. Such moves could lead to other manufacturers leaving the group, such as Peugeot and Citroën.
At the time, Tavares said the reason for Jeep’s decision was that the Chinese government increasingly wanted to interfere in business decisions. In addition, GAC’s local partner “did not do what it should have done”. But the international political situation also played a role – especially the threat to Taiwan from China. “We don’t want to be a victim of sanctions like other companies have been in other parts of the world recently,” Tavares said. By that he meant sanctions after Russia invaded Ukraine, after which many car manufacturers left Russia – some more, some less voluntarily. For example, competitor Renault-Nissan sold its plants there to Russian companies and institutions for a nominal amount, thereby incurring huge losses.
Electric cars from India to Europe?
“There is growing tension between China and the Western world. This will affect business,” Tavares added, according to Automotive News Europe and Reuters at an event in the Indian city of Chennai. India can be a beneficiary of this development. If you make electric cars for Europe there, you can benefit from lower labor costs in the country. His group is working on this option; but nothing has been decided yet.
However, Stellantis does not want to completely withdraw from China. The company can operate as a best seller and then import a few cars from Europe or the United States, said Tavares. This means that he still sees more opportunities than risks in the Chinese market, even if competition from western automakers there is now fierce. This is mainly due to domestic competition: products from Geely, BYD, GAC and Co. they are technically consistent and sometimes ahead in terms of electric drives, battery technology and software. Stellantis, Volkswagen or General Motors have had to give up the market shares that these manufacturers have won in recent years.
Yes, the technology is as good as mobile phones from China and as a consumer I cannot afford to make political decisions.
Certainly not. I don’t want to support countries like China economically and try to block products from such countries.
Carlos Tavares is an outspoken man, even when it comes to China. If the political and economic situation no longer allows for China’s lucrative business, then he will say so. It remains to be seen whether the Stellantis Group will close more plants. If so, an alternative is available in India. However, he does not want to completely abandon the Chinese market.