As Stellantis faces declining output in its Italian plants, the company is considering partnerships with Chinese automakers to revitalize its European manufacturing capacity. Sources reveal that Dongfeng, a long-time partner of PSA—now part of Stellantis—could potentially invest in or acquire European production sites in the future.
This move is reportedly part of a broader strategy by Chinese automakers to avoid European tariffs and capitalize on surplus manufacturing space in Europe. Many European manufacturers, including Stellantis, are struggling with excess capacity.
Stellantis’ Diminished Production In Italy
Stellantis, which formed from the merger of PSA and Fiat Chrysler, has faced significant production cuts at its Italian plants in recent years. According to Bloomberg, Italian production has dropped nearly 70% over the past 17 years, with some of the company’s luxury brands, such as Alfa Romeo and Maserati, particularly affected. This has sparked strikes and protests from workers, who have voiced concerns over job security and the lack of investment in local production.
The prospect of Dongfeng taking over some of these underused facilities is seen as an opportunity to inject new life into the operations. Dongfeng could either build Stellantis vehicles in China or potentially use the European plants to manufacture its own models, benefiting from local production while avoiding costly tariffs. The Chinese automaker could also later invest in or acquire some European plants, although details remain unclear.
A Strategic Partnership With Dongfeng
Dongfeng, which has an established history with PSA, has reportedly visited Stellantis’ European sites in Germany and Italy to explore the possibility of collaboration. While the specifics of the deal are still in the works, this partnership could help Stellantis address its production issues in Europe. Dongfeng’s expertise and production capabilities in China could also provide Stellantis with the ability to tap into the vast Chinese market, which has become increasingly competitive.
Reports suggest that Stellantis is also in discussions with other Chinese companies, such as Xpeng and Xiaomi, which could further expand its footprint in China and enhance its access to new technologies, according to Carscoops. A partnership with Dongfeng, however, would be particularly significant given the companies’ shared history through PSA. The relationship dates back to the joint venture, Dongfeng Peugeot-Citroën Automobile, which helped PSA enter the Chinese market, albeit on a smaller scale.
The Global Push By Chinese Automakers
The increasing interest from Chinese automakers in European manufacturing reflects a broader trend in the automotive industry. With tariffs on vehicles imported from China to Europe remaining a significant concern, Chinese automakers are exploring local production as a means to bypass these costs. Meanwhile, European automakers are left with excess production capacity, which, if not optimized, can be costly and inefficient.
For Stellantis, the partnership with Dongfeng could serve as a strategic move to capitalize on underused plants while also expanding its operations in a highly competitive market. The talks are ongoing, and while there is no indication that a deal has been finalized, both companies are exploring various possibilities. As Stellantis continues to navigate the challenges of the European market, partnerships with Chinese automakers may become a more common feature of its strategy.
While the details of Stellantis’ discussions with Dongfeng remain fluid, the potential for a partnership that revives European production plants and strengthens both companies’ positions globally cannot be ignored. If realized, this collaboration could serve as a model for other automakers grappling with production inefficiencies and the changing dynamics of global trade.
