(Yicai Global) April 24 -- Stellantis cannot accept failure in the Chinese market, despite moribund sales by its two joint ventures in the country, according to Grégoire Olivier, chief operating officer of its China business.

It is not just about sales and market share, but more to do with the fact that many important innovations in the global auto sector take place in China first, Olivier said in an interview with Yicai Global at Auto Shanghai. If the Chinese market is lost, Stellantis will become less competitive in worldwide, he said.

Stellantis was formed in January by the mega-merger of French auto giant PSA Group and Italian-American multinational Fiat Chrysler Automobiles. Before that, PSA and FCA each had their own joint venture in China, namely Dongfeng Peugeot Citroen Automobile and GAC Fiat Chrysler Automobiles.

Since 2017, the two JVs have suffered a cliff-like decline. Last year, Dongfeng Peugeot Citroen sold just 43,600 vehicles, while GAC Fiat Chrysler’s sold 40,500.

Below are highlights of the interview with Olivier.

Yicai Global: What is Stellantis’ strategy for China? How will brands like Peugeot, Citroen, Fiat and Jeep collaborate with its China JVs?

Olivier: We have already in China merged the two ex-FCA and ex-PSA teams, promoting a group of Chinese managers with very strong knowledge of the Chinese car market. We have decided to put the two teams in the shame headquarters in Caohejing [New Tech Zone in Shanghai.]

We have a large product offering and want to grow our sales in China, which is the only country in the world where Stellantis is not in the first three carmakers.

Beyond that Mr. Tavares, our CEO, has announced that he will put together a group to work on the Chinese strategy and he will announce this evolutionary strategy by the end of this year.

YG: What is Stellantis’ strategy for new energy and smart electric vehicles?

GO: It’s extremely important for us to be at the right speed in terms of energy transition. This is why Stellantis has invested a considerable amount of money and effort in mastering the whole value chain to manufacture electric cars.

So we invest in battery manufacturing with a partner in Europe, we invest in electric engines, in platforms, and in electric gearboxes for hybrid plug-in cars, and we will systematically offer our customers a full electric or plug-in hybrid version for each one of our models.

Today, about 35 percent of our models are electrified versions. In the next three years, we’ll go to 95 percent in most regions of the world.

YG: Crossover car manufacturing has been growing. How will it affect traditional auto industry, and how should the traditional makers react to this trend?

GO: Energy transition is here to stay, and we need regulations in China, in Europe and probably in the US, mandating very large demand for electric cars. So we are embracing this trend and we are developing the organs, the platforms and the cars to follow this trend.

We see a number of new competitors in China that specialize in electric cars. We welcome this competition, which will push us to do our best to accelerate this energy transition and to respect the various regulations around the world.

YG: What changes do you next expect to take place in China’s auto market?

GO: That’s a difficult question. What we have observed is that after 15 to 20 years of very fast growth, the Chinese car market in 2017-18 slowed down and even receded a little bit as most of the car market has become mature.

So we are still expecting some growth, but a slower growth like all mature markets. And then we expect China to be leading the world together with Europe in terms of energy transition and in terms of the mix of electric cars and we are preparing for that by launching electric models and plug-in hybrid models in China as all around the world.

Editor: Xu Wei, Peter Thomas