‘The American dream has faded’: how Jeep reached the end of the road in China

Chinese consumers have rapidly turned away from the iconic US brand, leading to plunging sales, spiking debts and a historic bankruptcy Like...

Chinese consumers have rapidly turned away from the iconic US brand, leading to plunging sales, spiking debts and a historic bankruptcy

Like many elder Chinese millennials, Alice Yu was deeply saddened last week when she heard the joint venture that made Jeeps in China had declared bankruptcy.

The 40-something recalled her then-boyfriend giving her an unforgettable gift in the early 2010s: an imported Jeep Grand Cherokee costing more than 400,000 yuan (US$55,700).

At the time, Yu was an up-and-coming media manager living in Shenzhen, and the luxurious SUV seemed to symbolise the "American dream" of freedom and prosperity that her generation aspired to.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

But that now feels like another age. The US brand has since fallen badly behind the times in China, leading to plunging sales, spiralling debts and a historic bankruptcy that will send shivers across the global auto industry.

On July 8, Stellantis and Guangzhou Automobile Group (GAC) announced their Chinese joint venture GAC Fiat Chrysler Automobiles had officially declared bankruptcy - a first for a Sino-foreign joint venture in China's car market.

Stellantis is a giant multinational that owns brands including Peugeot, Fiat, Chrysler and Maserati. But in China it was long synonymous with Jeep - an iconic brand whose history in the country dates back to 1949, when Mao Zedong was pictured saluting Chinese troops from a US Army Willys Jeep.

The company's failure in China comes at a time of fractious US-China relations, but in reality its decline has lessons for every global car maker. For analysts, Jeep's story shows how even the most successful brands are vulnerable amid the breakneck changes taking place in China's auto market.

"It won't be the last" joint venture to go bankrupt, said Zhou Lijun, director and chief researcher of auto industry analysis firm Yiche Research.

"The root of the crisis facing traditional joint-venture automakers is their failure to keep up with the structural transformation of China's market towards electrification, smart technology, and localisation."

Just a few years ago, Jeep was riding high in China. Its SUVs were coveted among young professionals like Yu, and the word "Jeep" was often among the first English words that Chinese children learned.

After GAC Fiat Chrysler Automobiles started producing Jeep SUVs locally in China in 2015, the company's sales skyrocketed, reaching a peak of 220,000 units two years later.

But its fortunes soon went into reverse, as consumer complaints about quality issues gained traction and the company failed to keep up with the rapid innovation taking place in the electric vehicle market.

By 2021, the joint venture's sales had plummeted to just over 20,000. The following year, it filed for bankruptcy as its debts reportedly soared to more than 4 billion yuan. It even struggled to sell off its factory assets.

"None of my friends today would consider buying a joint-venture Jeep - the American dream has long faded," Yu said.

Yu herself has switched to driving a Mercedes-Benz, but she is now interested in the new wave of minivans being released by Chinese electric car start-ups like Li Auto and Nio, which have "quite wonderful" interiors and features, she said.

Jeep is far from the only foreign auto brand struggling in China. The market share of Sino-foreign joint ventures plunged to just 27.5 per cent in 2024 from over 50 per cent in 2018, according to data from the China Passenger Car Association (CPCA).

Most joint-venture brands are simply bringing over existing European or American models, which no longer resonate with Chinese consumers

Zhou Lijun, auto industry researcher

The rapid shift away from global car brands has been driven by China's electric vehicle revolution, which caught many foreign firms off guard. In early 2021, new-energy vehicles accounted for just 7 per cent of total vehicle sales in China, but by July 2024 that had risen to over 50 per cent, CPCA data showed.

A decade ago, Western car brands were a byword for quality, sophistication and reliability in China. But that is no longer the case. To today's younger consumers, foreign cars often look out-of-date, as many of them offer lower specifications and fewer add-ons than domestic brands.

"They want better design, advanced features, and seamless digital integration, but the problem with joint-venture brands is that most of them are simply bringing over existing European or American models, which no longer resonate with Chinese consumers," Zhou said.

Yu still sees the traditional "BBA" - BMW, Mercedes-Benz and Audi - as symbols of safety and old-money sophistication, but said her teenage daughter called them "not cool". Her son simply asked, "What's BBA?"

In a sign of the times, many used Audis and BMWs are now so cheap on China's secondary market that Gen-Z consumers on limited incomes are buying them as their first cars. To this new generation, the German luxury vehicles have become bargain, last-resort purchases.

Meanwhile, the main buyers of new cars are middle-class 35-to-45-year-olds, who prefer new-energy vehicles with spacious interiors, modern design, hi-tech features and low running costs, according to Zhou. That is exactly the segment where domestic brands are thriving.

"The market share of joint-venture automakers might dip below 20 per cent or even lower in the next few years," Zhou said. "To survive, their only hope is to invest heavily in building real local research and development capabilities in China. But for most foreign brands, that's an almost impossible task."

More Articles from SCMP

Chinese hospital opens ‘Dislike Going to Work Clinic’ to address anxiety, depression

How China ‘leapfrogs’ other nations to build close African trade and military ties

Zhang Ziyu, China’s ‘strategic nuclear weapon’, on verge of medal in senior tournament debut

How a 19-year-old suffering from brittle bone disease beat the odds to excel academically

This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.