(Yicai) July 9 -- A court in China has declared the car production joint venture of GAC Group and Stellantis bankrupt, nearly three years after it entered bankruptcy restructuring following a slump in sales.

The Changsha Intermediate People’s Court declared GAC Fiat Chrysler Automobiles bankrupt yesterday due to insufficient assets to cover its debts and the inability to restructure or reach a settlement, the JV’s administrator announced the same day.

It has total debt obligations in excess of CNY8.1 billion (USD1.1 billion), of which CNY4 billion is undisputed debt, but only CNY1.9 billion (USD266.7 million) in assets, according to the court ruling. A creditors' meeting approved the asset distribution plan, which will proceed next.

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 main 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, a business model increasingly out of sync with the fast-growing trend toward new energy vehicles, so any buyer would need to make additional investment to repurpose it, an industry insider told Yicai.

Editors: Tang Shihua, Futura Costaglione