GAC-FCA Collapse Signals End of Old JV Model in China

The bankruptcy of GAC-FCA, the joint venture between Guangzhou Automobile Group and Fiat Chrysler Automobiles, reflects a deeper structural shift in China’s automotive market, particularly the rise of new energy vehicles (NEVs).

While China rapidly transitioned to electric mobility—NEVs now account for over 41 percent of vehicle sales—GAC-FCA remained focused on internal combustion engine models like the Jeep Cherokee and Renegade. As a result, the joint venture’s sales plunged from 205,000 units in 2017 to just 20,000 by 2021, ultimately leading to collapse.

Key Highlights

• GAC-FCA collapsed after failing to adapt to China’s rapid EV transition.
• Domestic brands like BYD now dominate with agile, tech-driven offerings.
• The joint venture model is outdated as Chinese firms lead the NEV market.

In stark contrast, domestic brands such as BYD have surged ahead, selling 1.26 million NEVs in the first five months of 2025. GAC-FCA’s failure is part of a wider trend where foreign joint ventures—such as Changan Suzuki and Dongfeng Renault—have exited the Chinese market after failing to adapt to electrification and local consumer preferences.

Jeep’s repeated struggles in China, dating back to its first venture in 1985, underscore persistent misalignments between Western strategies and Chinese market dynamics. Despite a $755 million investment and temporary success, quality issues and lack of agility sealed GAC-FCA’s fate.

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The joint venture model—mandated since 1994 to limit foreign ownership and build local capabilities—has become outdated. Since 2018, China has relaxed these restrictions, but domestic brands already dominate, especially in NEVs, where local firms control 61 percent of the market.

GAC-FCA’s demise illustrates how Chinese partners now often hold the upper hand, driving foreign automakers to rethink outdated strategies amid China’s electric revolution.