Nearly three years after entering the bankruptcy restructuring process, GAC Fiat Chrysler Automobiles, the Chinese automotive joint venture between GAC Group and Stellantis, was ruled bankrupt by a Chinese court.

The Changsha Intermediate People’s Court declared GAC Fiat Chrysler bankrupt yesterday because of insufficient assets to cover liabilities, and for failing to meet the conditions for restructuring or settlement, the asset administrator of the JV announced yesterday.

GAC Fiat Chrysler had total debt obligations of over CNY8.1 billion (USD1.1 billion), of which CNY4 billion undisputed debt, but only CNY1.9 billion (USD266.7 million) in assets for settlement, according to the court ruling. The creditors’ meeting approved the plan for asset distribution, which will be completed in the next stage.

GAC and Stellantis founded GAC Fiat Chrysler in 2011 as a 50:50 JV, with a total investment of CNY17 billion. It has factories in Guangzhou and Changsha, which have a combined annual production capacity of 300,000 vehicles.

After GAC Fiat Chrysler’s sales peaked at over 200,000 units in 2017, they started falling and never picked up until the company officially entered bankruptcy restructuring in October 2022.

In the past three years, GAC Fiat Chrysler did not find any interested investors. Moreover, five public auctions for its core assets, including land, buildings, and production equipment, were held in the period, but all failed due to a lack of bidders.

One of the reasons for GAC Fiat Chrysler’s difficulties in finding a buyer for its Changsha plant is that it mainly produces fossil fuel vehicles, which is against China’s electrification trend, meaning that buyers would need additional investment to repurpose the production lines after purchase, an industry insider told Yicai.