Stellantis and Dongfeng in $1.5b deal to make Jeeps, Peugeots in China

BANGALURU/MILAN - Stellantis and longtime Chinese partner Dongfeng have signed a US$1.2 billion (S$1.5 billion) deal to produce Peugeot- and Jeep-branded vehicles in China, the automakers said on Friday (May 15), hinting at future expanded co-operation.

The deal equates to a combined investment of more than eight billion yuan, or about one billion euros (S$1.5 billion), with Stellantis expected to contribute about 130 million euros.

It will be supported by industrial policies in Hubei province and the city of Wuhan, the companies said.

Aimed at supplying both the Chinese market and exports, the agreement forms part of Stellantis' new long-term strategy, which Chief Executive Antonio Filosa is due to unveil on May 21.

It underscores the Franco-Italian group's push to reposition itself in the world's largest auto market, reassess manufacturing options and pave the way for possible further co-operation beyond China.

Stellantis and Dongfeng also signed a non-binding strategic agreement "to further strengthen their co-operation by leveraging the two parties' scale, expertise, and R&D capabilities in the industry," Stellantis said in a statement.

Chinese automakers are keen to tap largely underused manufacturing capacity in Europe to accelerate local production and support expansion there.

Filosa has repeatedly said partnerships would be part of future strategy.

Last week, Stellantis said it would start joint vehicle production in Europe with Chinese partner Leapmotor, extending their tie-up beyond distribution into manufacturing.

Chinese comeback for Jeep production

Stellantis outlined some elements of the deal with Dongfeng last month, saying its Peugeot brand would build cars in China using the partner's technology under the existing DPCA joint venture.

On Friday, the companies said they also plan to produce two Jeep-branded off-road new energy vehicles at DPCA's Wuhan plant for global markets, starting next year.

The move marks a return to Jeep production in China after Stellantis and former Fiat-Chrysler partner GAC ended a Jeep-making joint venture in 2022. Since then, Stellantis has imported Jeeps into China.

"With a track record of more than 30 years of collaboration and shared automotive expertise, Stellantis and Dongfeng are ready to further leverage their strengths and introduce all-new vehicles with cutting-edge EV technologies," Filosa said.

"We look forward to this project and to collaborate even more in the future".

Dongfeng still owns a stake of just over one per cent in Stellantis, having been a longtime investor in Peugeot maker PSA, which in 2021 merged with Fiat Chrysler to form Stellantis.

ALSO READ: Peugeot to make China‑built vehicles using Dongfeng technology