Why Jeep Stopped Building Cars In China

This is the story of GAC-FCA, a short-lived joint venture that produced Fiat- and Jeep-branded cars for the Chinese market, including the China-exclusive Grand Commander. It was the second venture into the Chinese market for both Fiat and Jeep, and unfortunately, it didn’t end well.

A Short History of Jeep in China

The modern history of Jeep in China began in 1984 with the Beijing Jeep Corporation (BJC), a joint venture between Beijing Auto Works (BAW) and American Motors Corporation (AMC). This partnership produced the Cherokee XJ, the Grand Cherokee, and an upgraded version of the BJ212. The joint venture continued after AMC was acquired by Chrysler in 1987. BJC explored the possibility of manufacturing the Chrysler LeBaron in China, but this project was ultimately canceled.

After Daimler acquired Chrysler, the joint venture was renamed Beijing-Benz Daimler-Chrysler. Several models were added to the lineup, including modernized versions of the Cherokee XJ, the Chrysler Sebring, the Chrysler 300C, and the Mercedes-Benz E-Class. Daimler-Chrysler also had an alliance with Mitsubishi Motors, which led to the addition of the Mitsubishi Outlander and Pajero Sport to the lineup.

When DaimlerChrysler began to disintegrate, Daimler took full ownership of the Chinese joint venture, renaming it Beijing-Benz Automotive Corporation (BBAC). Daimler sold Chrysler to Cerberus Capital Management in 2007, but that arrangement failed and Chrysler declared bankruptcy in 2009. Chrysler was rescued by the U.S. government, which took a controlling stake in the company. Production of Jeep and Chrysler vehicles in China ceased that same year.

At the time, the Jeep brand remained strong in China, even beloved, eventually enabling FCA to reintroduce Jeep in 2015.

A Very Short History of Fiat in China

Fiat — which bought Jeep and the rest of the Chrysler brands after their bankruptcy — also has a history in China. It began with Nanjing Fiat Automobile, a joint venture between Nanjing Automobile and Fiat, established in 1999. This partnership produced the Fiat Palio, Palio Weekend, Siena sedan, and Perla sedan. Unfortunately, it didn’t succeed. Due to insufficient investment and conflicts between the partners, the joint venture was terminated after just seven years in 2006. Fiat exited China, but the Italians would return soon after.

The GAC-Fiat Joint Venture (2010)

In the late 2000s, China’s car market was booming, and everyone wanted in—or back in. Fiat secured a new 50-50 joint venture agreement with Guangzhou Auto Corporation (GAC). The deal was signed in Rome in August 2009, with China’s President Hu Jintao and Italy’s Prime Minister Silvio Berlusconi in attendance. The initial investment was 7 billion yuan. GAC-Fiat constructed a large factory in Changsha, Hunan Province, with a first-phase annual capacity of 140,000 vehicles and a planned second-phase capacity of 250,000 vehicles. Production began in 2012 with the Fiat Viaggio sedan, followed by the Fiat Ottimo hatchback in 2014. These Fiats were closely related to the Dodge Dart and shared the same platform.

In The meantime

In 2011, the U.S. government sold its shares in Chrysler to Fiat. In 2013, GAC and Fiat signed an additional agreement to produce Jeep-branded cars in China. Construction of the second GAC-Fiat factory began in Guangzhou, Guangdong Province. In 2014, the Italians acquired the remaining shares of Chrysler, becoming its sole owner. The company was subsequently renamed Fiat Chrysler Automobiles (FCA). And this, at last, brings us to Jeep’s re-entry into China.

GAC-Fiat Becomes GAC Fiat Chrysler Automobiles (2015)

In 2015, GAC Fiat was renamed GAC Fiat Chrysler Automobiles, abbreviated as GAC-FCA. Its Chinese name was 广汽菲克, Guangqì Fēikè.

广汽 is short for GAC, while 菲克 is the Chinese abbreviation for FCA, combining 菲 from 菲亚特 (Fiat) and 克 from 克莱斯勒 (Chrysler).

The new factory in Guangzhou was completed, and the first Jeep to roll off the production line was the Cherokee, followed shortly by the Renegade and the Compass. GAC-FCA had a complex structure, comprising two joint ventures: one for production and another for sales. The sales joint venture was also responsible for distributing imported Jeeps, such as the Wrangler built in Toledo.

‘Freedom Light’: The China-Made Jeep Cherokee (2015-2022)

The Cherokee launched in the Chinese car market in early 2016. The Chinese name for the GAC-FCA Cherokee was 自由光 (Zìyóuguāng), best translated as “Freedom Light” (as in sunlight). Buyers could choose between FWD and AWD, as well as between two Tigershark engines: a China-exclusive 2.0-liter engine with 155 hp and a 2.4-liter engine with 175 hp. Both engines were paired with a nine-speed automatic transmission, which was quite advanced for China at the time. [Ed Note: I’m fairly sure that 2.0 was what we at FCA called the “sub-two-liter,” which was an option for tax purposes, since there’s a tiered tax system based on engine displacement. -DT]. 

Jeep offered five trim levels, including the 75th Anniversary Tribute Edition, celebrating the 75th anniversary of the Jeep brand. The Jeep Cherokee 75th Anniversary Tribute Edition featured stylish “Seventy Five Years” badges on the front fender, orange Jeep and Cherokee logos, bronze-colored five-spoke wheels, and bronze accents on the grille, bumpers, and roof rails.

2021 update.

‘Liberty’: The China-Made Jeep Renegade (2016-2022)

The Renegade launched in China in mid-2016. Its Chinese name was 自由侠 (Zìyóuxiá), which literally means “Liberty.” The Renegade was available with two engines: a Fiat-sourced ‘Fire’ 1.4 turbo with 150 hp and the 2.0 Tigershark, again with 155 hp. The 1.4 turbo was always FWD and paired with either a 6-speed manual or a 7-speed DCT. The 2.0 was always AWD and paired with a 9-speed automatic. Jeep offered eight trim levels, which was typical for China at the time; nowadays, most automakers offer a maximum of four trim levels. In 2019, Jeep replaced the 1.4 turbo with a new 1.3 turbo, producing 173 hp. The 2.0 was subsequently retired, leaving the 1.3 turbo as the sole engine option.

‘Guide’: The China-Made Jeep Compass (2017-2022)

The Compass launched on the Chinese car market in 2017. Its Chinese name was 指南者 (Zhǐnánzhě), meaning “Guide” (as in tour guide). Jeep offered two engine options: the same 1.4 turbo as in the Renegade, but tuned to 165 hp. The FWD version was paired with a 7-speed DCT, while the AWD version came with a 9-speed automatic.

The second option was a naturally aspirated 2.4 with 175 hp, available only with AWD and the 9-speed automatic. In 2019, Jeep added the 173 hp 1.3 turbo to the lineup, though the 1.4 turbo remained available. In 2020, both the 1.4 turbo and the 2.4 were discontinued, leaving the 1.3 turbo as the only engine option.

The Jeep Yuntu Concept (2017)

Things looked promising in 2017. Sales were up, and the new Compass had become the best-selling model in the Jeep lineup in China. GAC-FCA wanted more, and the joint venture began developing its first China-only model.

The goal was to create a new large SUV with seven seats and a PHEV powertrain. At the 2017 Shanghai Auto Show, Jeep unveiled the Yuntu, a concept car that previewed the upcoming China-only SUV. It was an attractive vehicle with a fresh design language, large wheels, and high ground clearance. Some details, like the suicide doors, were typical of concept cars, but otherwise, it looked nearly production-ready. This gave plenty of reasons for optimism about the Jeep brand in China. However, the joint venture had to focus on the Fiat brand first.

The Demise of Fiat (2017)

The two Fiats struggled in China. The Fiat brand lacked strong name recognition, and the Viaggio and Ottimo were sold in a segment increasingly dominated by Chinese competitors. Fiat didn’t introduce any upgrades, nor did it launch any new models. At the time, a news article remarked: “Fiat can no longer be described as slow in product introduction because there are no new products to launch at all, not even a plan.”

The Viaggio and Ottimo no longer stood a chance; price cuts didn’t help either, and both cars were discontinued in 2017, although sales of dealer inventory continued until 2019. Sales of the Fiat cars were decent at first. In 2013-2014, Fiat regularly sold around 7,000 cars or more. However, from 2016 onwards, sales declined, dropping to around 1,500 units per month, then further to 250 per month in 2017 and just 70 per month in 2018. The last full month of sales was February 2019, with only 19 units sold. It was a sad end for Fiat in China—once again.

The Grand Commander (2018-2022) and The Commander (2018)

In 2018, GAC-FCA launched the production version of the Yuntu, named the Grand Commander (You probably saw photos of the prototypes all over the internet back around late 2017, early 2018). It was the joint venture’s first China-only model, and as it turned out, also its last.

It was also not a PHEV but an ICE. Unfortunately, Jeep caused confusion almost immediately by launching the Commander at the same time. The Grand Commander and Commander were essentially the same cars, with the same wheelbase, but the Grand Commander had seven seats while the Commander had five.

The Chinese names were 大指挥官 (Dà Zhǐhuīguān), meaning Big Commander, and 指挥官 (Zhǐhuīguān), meaning Commander. Nobody understood the logic, and after just one year, the Commander was discontinued, making it the rarest GAC-FCA Jeep ever. The five-seat version was then rebranded as a variant of the Grand Commander, rather than a separate model.

2018: Grand Commander (7-seat). Commander (5-seat).
2019: Grand Commander (5 or 7 seats).

For simplicity, I will focus on the 2019 Grand Commander. It was a mid-size crossover SUV built on the FCA Compact Wide LWB 4X4 platform. The vehicle had an attractive design, featuring the typical Jeep grille and an off-road style. It came with large bumpers, side steps, darkened headlights, tinted windows, roof rails, and dual exhaust tips.

The interior was luxurious, with plenty of leather and aluminum trim. However, the technology felt somewhat outdated for 2018, with a small 8.4-inch touchscreen and a 7-inch LCD in the instrument cluster. At the time, even Volkswagen offered larger touchscreens!

The Grand Commander’s dimensions were 191.9 inches in length, 74.5 inches in width, and 68.4 inches in height, with a 110.2-inch wheelbase. Despite its grand name and sizable dimensions, the engine was relatively small: a Hurricane 2.0 turbo producing 230 hp. The engine was paired with a nine-speed automatic transmission. The base versions were FWD, while the top-spec models featured AWD. The top speed was 124 miles per hour, and the 0-100 km/h acceleration time was 8.3 seconds (FWD) or 8.8 seconds (AWD).

Why Things Went Wrong

Looking back, 2017 was the best year ever for GAC-FCA. In late 2018, things quite suddenly started to go wrong, and sales declined. This was caused by a myriad of overlapping problems. Some were new, while others had been simmering under the surface for a while.

To start with, there were numerous quality issues, especially with gearboxes, engine noise, engine shaking, and engine exhaust failures. A PR drama unfolded in 2018 around a consumer-rights program that claimed several Jeep models consumed an excessive amount of oil. GAC-FCA agreed to repair the engines of the affected cars, but that didn’t resolve the issue. Consumers became angry, and accused the dealers of fraud. FCA then stated that the issue was not a defect in the cars but an individual phenomenon caused by improper driving by the car owners. This statement severely damaged Jeep’s reputation in China, and sales fell after the incident, which has since been known as “Accelerator Gate.”

As sales dropped, dealers complained that GAC-FCA failed to adjust production and forced them to take on more cars than they could sell. Many dealers simply quit. I can vividly remember an empty Jeep dealership near my home in Beijing—the place suddenly closed, and all the cars were gone. Furthermore, the lineup was outdated. While the Grand Commander was new, the other cars had been around since 2016-2017. There had been minor updates, but not enough to remain competitive.

And indeed, that was the biggest problem: Increased competition. By late 2019, SUVs from local Chinese brands had become much better than they were just three years earlier. This included vastly improved SUVs from established brands like GWM, Changan, Geely, and even GAC’s own Trumpchi brand. New players had entered the market as well, such as NIO and Xpeng, offering high-tech SUVs targeting the same consumers as Jeep.

Jeep Grand Commander e (2019-2022)

Jeep tried to turn things around with the “Grand Commander e,” a PHEV version of the Grand Commander. In China, PHEV/EV versions of existing cars are mostly sold, counted, and marketed as separate models. The PHEV powertrain of the Grand Commander e combined the 230 hp 2.0 turbo engine with a 208 hp electric motor. The transmission was an E-CVT, sending power to the front wheels only. There was no AWD version of the PHEV.

The top speed was 99 miles per hour and 0-100 km/h took 8.6 seconds. It had a 44-mile electric range. Those were decent specs for a Jeep, but in 2019 Chinese consumers could also opt for a brand-new Li One EREV with 450 hp combined, or, for a little extra cash, get a NIO ES6 EV with 544 hp. The e had come too late and faced an uphill battle against the local Chinese brands.

Zeng and Manley meet (2019)

In the spring and summer of 2019, GAC CEO Zeng Qinghong and FCA CEO Mike Manley met twice to discuss the progress and plans of the joint venture. The gentlemen decided to carry out “drastic reforms,” including adjustments to the organizational structure and personnel. The main goal of the reorganization was to make GAC-FCA “improve efficiency to adapt to changes in the market environment,” which was corporate-speak for dealing with increased competition. GAC-FCA also announced plans to launch eight new or remodeled Jeep models in China by 2022, two of which would be customized for the Chinese market. In another important change, the previously separated production and sales businesses were merged into one.

The 2020 Strategic Cooperation Memorandum

In July 2020, GAC and FCA held another meeting to discuss the future of the joint venture. The reorganization hadn’t produced any quick results, and sales declined further. In the first half of 2020, sales totaled only 17,800 vehicles—a year-on-year decrease of 50.3%. The parties drafted a “strategic cooperation memorandum,” which called for: “further strengthening cooperation in the Chinese market, optimizing GAC-FCA’s business, and accelerating the introduction of new products, including electric vehicles.” This was as vague as it sounded—much more vague, in fact, than the earlier plan—and the memorandum didn’t specify any actual upcoming models.

COVID

Covid was a major problem for all joint ventures. Foreign staff had moved out, and in-person meetings became nearly impossible from early 2020 onwards. Car sales plummeted, especially during the scariest days in the first half of 2020.

In the Meantime: Stellantis was Formed

At the same time, FCA was busy elsewhere. In late 2019, it merged with the PSA Group, and the new company was renamed Stellantis. It began operations in January 2021 and is statutorily based in the great city of Hoofddorp, in the Netherlands. If you’re looking for desolate office buildings with rain and wind, plus a crappy shopping mall with more rain and wind, head to Hoofddorp.

Anyway. With the merger, Stellantis ended up with three joint ventures in China: GAC-FCA, Dongfeng-PSA, and Changan-PSA.

Sales Fall Even Further

By 2020, sales were spiraling downward. According to 2021 estimates, GAC-FCA had lost nearly 5 billion yuan in three years and was heading for insolvency. By 2021, Jeep had dropped from 51st to 61st in the rankings, and by May 2022, it had plunged straight to 103rd.

The 2021 Grand Commander Update

In September 2021, GAC-FCA unveiled an updated Grand Commander for the 2022 model year. The update included a redesigned front, new lights, and new wheels. Crucially, however, the interior remained unchanged, and the poor car soldiered on with its tiny 8.4-inch screen. For comparison, the Li One boasted three screens (16.2 + 10.1 + 12.3 inches), and the NIO had two (8.8 + 11.3 inches).

In the Meantime: Beijing Changes the Rules

In 2018, China announced a major change to the joint venture rulebook, which came into force in 2022. Under the old rules, in place since the early 1980s, the foreign partner couldn’t own more than 50% of a joint venture. The new rules allowed foreign partners to hold a majority stake. However, changes to the structure of an existing joint venture required the consent of the Chinese partner and government approval.

Only two joint ventures made such changes: BMW took a majority stake in Brilliance-BMW, and Volkswagen took a majority stake in JAC-VW, renaming it Volkswagen Anhui. Also in 2018, the government permitted foreign carmakers to establish fully owned operations in China. This change enabled Tesla to set up shop in Shanghai without a Chinese partner. In late 2024, Toyota applied for a similar deal.

Stellantis Fights for More and Loses

Stellantis saw an opportunity to take control of the joint venture and save its business in China. In early 2022, Stellantis announced plans to increase its stake in the joint venture from 50% to 75%. GAC appeared surprised by this announcement and stated no formal agreement had been signed. GAC added: “The way it was released was not approved by us, and GAC Group deeply regrets it.”

On July 18, 2022, Stellantis announced its decision to exit the joint venture. In a strangely brief statement, Stellantis said: “Lack of progress in the previously announced plan for Stellantis to take a majority share in their joint venture led GAC Group and Stellantis to initiate discussions to terminate the joint venture that produces and distributes Jeep products in China.”

GAC responded by criticizing Jeep’s operations, apparently referring to earlier quality issues: “Several of the vehicles failed to achieve success, which is the result of a lack of respect for customers in the Chinese automobile market.” There was a back-and-forth over paperwork. To acquire 75% of the joint venture, GAC-FCA needed government approval. Stellantis claimed GAC refused to sign the necessary documents, while GAC argued it had never agreed to Stellantis’s plans and therefore wasn’t required to sign anything.

And that was the end of it.

Terminated & Bankrupt

Things went downhill very quickly after that. In October, the joint venture filed for bankruptcy in China. On October 31, Stellantis issued another short and terse statement, which I will quote in full:

“The shareholders of the GAC-FCA Joint Venture, Guangzhou Automobile Group Co., Ltd. and Stellantis N.V., have approved a resolution authorizing the Joint Venture to file for bankruptcy, in a loss-making context. Stellantis fully impaired the value of its investment in the GAC-FCA JV and other related assets in its first half 2022 financial results. Stellantis will continue providing quality services to existing and future Jeep® brand customers in China.”

That was all Stellantis said after 12 years of working together. Clearly, there was no love lost.

Selling Assets is Never Easy

Production of all Jeeps in China stopped overnight, and staff was sent home. It was time to clean up the mess. The joint venture had two factories: the original Changsha factory and the newer one in Guangzhou. After the Fiat cars were canceled, the Changsha factory also began producing Jeeps. The Guangzhou plant was taken over by GAC and subsequently used to manufacture electric cars for GAC’s Aion brand. However, GAC had no interest in the older Changsha plant. The administrator tried to auction it off three times and failed. The factory stands empty and remains unsold.

GAC After the JV Ended

GAC went on a roll. First, it terminated a joint venture with Mitsubishi, taking over a factory in, of all places, Changsha. It expanded joint ventures with Toyota and Honda. The Aion brand became the second-best-selling EV-only brand in China, and it launched a new high-end supercar EV brand called Hyptec. The Trumpchi brand is still going strong, launching ever-larger MPVs and modern SUVs.

Jeep After the JV Ended

Jeep still sells cars in China, but only as imports, which means import tariffs and thus higher prices than the local competition. The bestseller is the Wrangler, a niche product with minimal sales, and it is under pressure from off-roaders by Chinese brands and the Jiangling-Ford Bronco. In 2022, Jeep launched an odd and somewhat desperate special: the Wrangler Altitude Bahamas Pink Special Edition.

The Stillborn Jeep Compass 4Xe

GAC-FCA was very close to launching the Jeep Compass 1.3T 4xe PHEV. Development was complete, and the joint venture had obtained all the necessary government permits to launch the car. It was even included in the MIIT catalog, which typically means a vehicle will launch within a few months. But it came too late. The joint venture collapsed, and that was the end of the China-made 1.3T 4xe. A few dozen pre-production cars were built, but the whereabouts of these cars are unknown.

The Death Of Jeep In China

What killed GAC-FCA? A lot. A lack of new products. An overly complex JV structure. FCA being distracted by becoming Stellantis. GAC being distracted by its many other operations. Increasing competition in China with the growth of local brands and the EV revolution.

Distrust between the partners, mainly caused—or so it seems—by Stellantis’s strange ways of communicating. It can also be argued, but this is speculation, that GAC didn’t really care about building aging Jeeps anymore. It was, in the end, just a small portion of its overall sales. Tellingly, in many earlier disbanded joint ventures, the Chinese side usually bought the platforms for its own brands. But not in this case. GAC had no use for Jeep’s technology because it was way ahead. Ouch!