Bloomberg reports, citing people familiar with the matter, that Stellantis is in discussions with Dongfeng Motor Group to revive their cooperation, which would involve joint vehicle production in both China and Europe.
According to the sources, the two sides are negotiating an arrangement that would allow Dongfeng Motor Group to use Stellantis’ underutilized factories in Europe. In exchange, Dongfeng may produce some of Stellantis’ brand models in China.
People with knowledge of the matter add that representatives from Dongfeng Motor Group have recently inspected Stellantis production bases in Germany and Italy. The talks also include the possibility of Dongfeng acquiring or investing in one or more of Stellantis’ European factories at a later stage.
The negotiations with Dongfeng are a key part of Stellantis’ efforts to strengthen its business and pursue transformation. The group is currently facing volatile demand and intense competition from rivals such as Volkswagen and BYD. Bloomberg reported last month that Stellantis executives had also met with Xiaomi and XPeng to discuss business restructuring plans.
While no final agreement has been reached, Stellantis may still partner with multiple Chinese companies simultaneously, the insiders said. Stellantis has already teamed up with Leapmotor to expand sales in Europe and plans to adopt more of Leapmotor’s technologies to bolster mass-market brands including Fiat and Opel.
In a statement, Stellantis said: “As part of normal business operations, Stellantis holds multi-field consultations with various industry partners around the world, with the ultimate goal always being to provide consumers with the best mobility choices.” The group declined further comment.
Dongfeng Motor Group stated: “Dongfeng and Stellantis enjoy a solid foundation of cooperation and will continue to strengthen complementary advantages in the future.” French newspaper Les Echos reported that a Stellantis representative said at an event in Wuhan this week that China offers huge growth and cooperation opportunities for the group.
Following the news, Stellantis shares rose 3.2%, though they are still down roughly 25% so far this year.
A deeper partnership would revive a relationship that began in the early 1990s, when PSA Group — Stellantis’ predecessor — formed a joint venture with Dongfeng to enter the Chinese market. However, sales and output at the joint venture have shrunk sharply in recent years amid intensifying competition. The latest negotiations have not been finalized and could still fall apart, according to people familiar with the matter.
Bringing in a Chinese manufacturing partner would help the European business lower costs, improve factory utilization, and avoid politically sensitive plant closures. Stellantis runs dozens of factories across Europe, many of which are operating below full capacity. Meanwhile, Chinese automakers expanding in Europe are eager to avoid EU tariffs through local production.
Stellantis has long sought to boost underperforming European brands such as Alfa Romeo and Maserati. Maserati, a luxury brand produced exclusively in Italy, has seen continuous sales declines, including in the Chinese market. In the first quarter of this year, the Cassino plant, which manufactures Alfa Romeo and Maserati models, was the only Stellantis production base in Italy to report a drop in output. Maserati said in January that it was open to technological cooperation.
Stellantis’ push for partnerships highlights a divergence between its European and North American operations. In North America, the group has launched around $13 billion worth of investments to refresh its product lineup. In the U.S. market, however, Chinese technologies and investments face policy restrictions and complex implementation. Earlier this week, Stellantis reported a rise in global sales in the first quarter, driven mainly by its North American business.
Stellantis has hired consultants including McKinsey to conduct a comprehensive review of its operations, the sources said. Chief Executive Officer Carlos Tavares is expected to announce further strategic measures at a capital markets day on May 21, including improving profitability in its European business and prioritizing investments in North America.