He added that the company didn’t want to face cross-sanctions imposed on other companies in other regions.

Unsuccessful in gaining traction in the world’s biggest car market, Stellantis NV announced last week that it would stop Jeep production in China and dissolve a 12-year joint venture with state-owned Guangzhou Automobile Group. Jeep is pulling out of the Chinese market as several established foreign auto brands find it challenging to hold on to their market share, raising concerns about their long-term prospects in China.

The conflict in Ukraine also contributes another concern for Chinese carmakers to consider. Carmakers would consider whether sanctions against Russia would also apply to China if the country takes military action against Taiwan.

In addition, the business of international automakers, including Stellantis, Volkswagen AG, and General Motors Co. in China, is threatened as local Chinese manufacturers launch multiple fully electric models.

According to Tavares, German and U.S.-branded vehicle sales declined roughly a fifth in China during the first half, a double-digit drop for Japanese brands, while Chinese businesses’ sales rose.

Tavares stated that sanctions against Iran, and Russia, revealed how businesses were forced to choose one of two sides.

Tavares said that the decision was driven by losses and “broken trust” with its local partner, the Chinese Communist Party, and its economic policies that favored domestic companies.

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