Stellantis joint venture with China's GAC to close one of two plants

BEIJING (Reuters) -Stellantis NV's Chinese venture with GAC will close one of its two factories in China by next March, GAC told Reuters, as Stellantis restructures operations in the world's biggest auto market where it has struggled to sell cars.

The joint venture, which has capacity to make 328,000 vehicles a year, sold only 12,288 in the first seven months this year, all Jeep-branded sport-utility vehicles.

It will transfer production from Guangzhou to Changsha to "increase (the) utilisation rate of plants and lower cost", GAC said in a statement. The Changsha factory has capacity to make 164,000 vehicles a year, still far more than the venture sells.

The joint venture was launched by GAC and Fiat Chrysler (FCA), which merged with PSA to become Stellantis.

A Stellantis spokesperson declined to comment.

As well as the GAC partnership, Stellantis operates a joint venture in China with Dongfeng Motor Group, which sold 47,788 cars between January and July.

It earlier closed two plants to tackle overcapacity. Both joint ventures are exporting China-made vehicles.

Stellantis Chief Executive Carlos Tavares said the firm was studying a new China strategy, which will be in place by the end of the year. It plans to introduce its Opel brand in China, offering fully electric vehicles.

As competition heats up in China, where more than 25 million vehicles were sold last year, several joint ventures between international automakers and local partners cut operations due to declining sales.

Mazda Motor ended its joint venture with FAW last month, and Hyundai Motor's tie-up with BAIC has sold one factory to electric vehicle maker Li Auto.

Last year, Renault SA shut its venture with Dongfeng less than five years after they started production. In 2018, Suzuki Motor exited its only Chinese joint venture with Changan.

(Reporting by Yilei Sun, Guillaume Gilles and Giulio Piovaccari; Editing by Susan Fenton and Edmund Blair)