Fiat’s offspring are a good refuge against Beijing’s anti-wealth crusade

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Both Stellantis and Ferrari depend little on China, something that until now has been considered a problem.

The offspring of Fiat Chrysler Automobiles could emerge as a spirited guard against China’s anti-wealth offensive. Daimler-owned BMW, Mercedes Benz and other companies risk being hit if President Xi Jinping’s campaign for “common prosperity” extends to high-end vehicles. However, Ferrari and Stellantis could give investors some cover.

Nervous Chinese consumers already turned away from flashy vehicles once, during the 2015 anti-corruption campaign, which hit high-end consumer brands. Ferrari, which Fiat Chrysler disbanded at the end of that year, suffered a 30% year-on-year drop in the country’s six-month moving average of quarterly sales, according to a Bernstein study. Purchases of some Mercedes and BMW models fell 20% and 10% respectively.

These figures would likely be higher if the Chinese leader took a look at high-end brands this time. Audi, Mercedes and BMW could sell a total of 2.6 million units in China this year, industry analysts predict. The Middle Kingdom accounts for about half of Audi’s global revenue, 30% of BMW’s and 26% of Daimler’s, Bernstein calculates.

Ferrari is better insulated. Mainland China, Hong Kong and Taiwan accounted for just 8% of its roughly 10,000 sports cars sold worldwide in 2019. In that sense, a 30% sales drop over six months would equate to just 125 vehicles. Also, the lengthy waiting list for a Ferrari means that the Italian brand could redirect them to buyers from other countries.

Stellantis, created in January from the merger of Jeep maker Fiat Chrysler and Peugeot’s French parent PSA, has little presence in China. In the first six months of the year it sold 50,000 vehicles, which represents only 1.5% of its total production. That excludes Maserati, Stellantis’ only luxury brand, which sold some 20,000 vehicles worldwide in 2020.

The miniscule presence of the company in which it is, with 25 million vehicles sold per year, the largest automobile market in the world has long been considered a problem. Facing it is one of Carlos Tavares’ priorities. The company is in talks to buy control of its joint venture with Guangzhou Automobile, Bloomberg reported last week.

However, being behind could become a quality. True, if Xi’s desire to curb “excess revenue” spreads to automakers, the worst-hit rivals may decide to sell their sudden excess inventory cheaply in other markets, forcing the industry into a price war. .

With that caveat, however, Stellantis and his former garage buddy Ferrari could offer investors convenient protection against a drastic backlash from China.