Stellantis in Talks with Dongfeng to Forge Vehicle Manufacturing Partnership in China and Europe

Stellantis is in talks with Dongfeng Motor Group to revive their partnership, planning joint vehicle manufacturing operations in both China and Europe. According to informed sources, discussions include allowing Dongfeng to utilize Stellantis’ underutilized European plants, while Dongfeng may also produce certain Stellantis-branded models in China. Recently, Dongfeng representatives have inspected production facilities in Germany and Italy, and negotiations also cover the possibility of Dongfeng acquiring or investing in one or more of Stellantis’ European factories. This potential collaboration represents a key move by Stellantis to address volatile market demand and mounting competitive pressure from rivals such as Volkswagen and BYD. Previously, Stellantis executives also met with Chinese automakers including Xiaomi and XPeng to explore business restructuring options. While no final agreement has been reached, Stellantis has not ruled out cooperating simultaneously with multiple Chinese companies. The automaker has already partnered with Leapmotor to expand in Europe and plans to increasingly integrate Leapmotor’s technology into its Fiat, Opel, and other brands. Stellantis stated it is currently engaged in discussions with numerous global industry partners across multiple areas, aiming to deliver the best mobility solutions for consumers, and declined further comment. Dongfeng Motor Group responded that both sides share a solid foundation for cooperation and will continue strengthening complementary advantages. French media reported that during a recent event in Wuhan, Stellantis representatives highlighted China’s significant potential for growth and collaboration. Following the announcement, Stellantis’ stock rose 3.2% on the day, though it remains down approximately 25% year-to-date. If finalized, this deal would mark a revival of a partnership dating back to the early 1990s, when PSA Group—the predecessor of Stellantis—formed a joint venture with Dongfeng to enter the Chinese market. However, in recent years, intensifying competition has led to a sharp decline in sales and output at the JV. Partnering with a Chinese automaker could help Stellantis improve utilization rates at its European plants, reduce operating costs, and avoid politically sensitive issues associated with plant closures. Stellantis currently operates dozens of factories across Europe, many of which suffer from excess capacity. Meanwhile, Chinese automakers are eager to leverage localized production to circumvent the EU’s recently imposed tariffs on imported electric vehicles. Stellantis is also seeking ways to revitalize its weaker European brands, such as Alfa Romeo and Maserati. Maserati, produced exclusively in Italy, has seen continuous sales declines in recent years—including in China. In Q1 2024, the Cassino plant, which manufactures both brands, was the only Stellantis facility in Italy to report a year-over-year production drop. Maserati stated in January that it remains open to technical collaborations. Currently, Stellantis’ operations in North America and Europe are diverging: the company has launched roughly $13 billion in investments in North America to refresh its product lineup, but U.S. policy restrictions make incorporating Chinese technology and investment in that market complex. In Q1 2024, Stellantis achieved global sales growth, primarily driven by strong performance in North America. It is understood that Stellantis has engaged consulting firms such as McKinsey to conduct a comprehensive review of its business. CEO Antonio Filosa is expected to unveil additional strategic initiatives—including measures to improve European profitability and prioritize North American investments—at the company’s Capital Markets Day on May 21.