By Greg Gao

GAC-FCA(广汽菲克), a joint venture between automobile companies Guangzhou Automobile Group(GAC) and Stellantis, filed for bankruptcy, and its shareholders GAC and Stellantis approved the termination on October 31, putting an end to a joint venture that began in 2010, according to GAC.

The announcement shows that GAC-FCA was established on March 9, 2010, and GAC and Stellantis each hold 50% of its equity. In recent years, affected by the decline in product competitiveness and declining sales, GAC-FCA’s production and operation have gradually fallen into difficulties. 

Although the shareholders have taken active measures and increased capital several times, the operating performance has not improved. Currently, its production has been completely stagnant.

GAC Group says the joint venture had liabilities of RMB8.113 billion($1.11 billion), almost 111% of its assets equating to RMB7.3 billion ($1 billion) at the end of September. As a result, GAC-FCA filed a bankruptcy application with the court in accordance with current laws and regulations in China, such as the Bankruptcy Law.

In July this year, GAC Group announced that GAC-FCA has lost money in recent years and has been unable to resume normal production and operation since February this year. GAC Group and Stellantis are negotiating to terminate the joint venture in an orderly manner and will properly handle the joint venture following laws and regulations. The relevant asset impairment was confirmed in GAC Group’s annual financial report last year.