Michael Dunne has a name for what's happening at Stellantis, and it's not subtle. He calls it "the canary."
Dunne, longtime China auto analyst and author of the upcoming book Car Wars, joined the show to trace how Stellantis went from manufacturing Jeeps in China to quietly becoming dependent on a Chinese partner for its own global lineup.
How We Got Here
Stellantis operated a joint venture manufacturing Jeeps in China
That venture went bankrupt roughly two years ago, forcing Stellantis to withdraw from Chinese production entirely
Stellantis pivoted to a "special relationship" with Leapmotor, a Chinese automaker on pace to produce a million vehicles this year
Leapmotor will now manufacture vehicles branded as Opel, Dodge, and Fiat for global export, badges the average buyer will likely never realize came off a Chinese production line
We have come to the conclusion that we cannot compete against the Chinese. Our best bet is to basically join the Chinese.
Why This Isn't the Japan or Korea Story Again
The comparison everyone reaches for, "China is just the next wave, like Japan in the '80s or Korea after that", is exactly the comparison Dunne says to throw out.
China is of a scale and magnitude and ambition that's eons beyond what the Japanese and Koreans were after. China plays a winner-take-all game.
The numbers back him up. More than a million Chinese-made vehicles are headed to Europe this year alone. Volkswagen is discussing up to 100,000 layoffs and plant closures it hasn't made since World War II. Honda posted its first annual loss since the 1950s. This isn't market share erosion at the margins. It's a structural shift happening in real time, across multiple countries, to multiple legacy automakers simultaneously.
The Other Shoe: Lexus Goes to Shanghai
If Stellantis capitulating feels like an outlier, Lexus just made a move Dunne calls "monumental." The brand, built for decades on a "manufactured in Japan" identity, announced it will produce vehicles in a wholly-owned Shanghai subsidiary for both the Chinese market and global export.
Given the historically fraught relationship between Japan and China, that's not a small decision. It's a Japanese automaker concluding that the only way to compete on cost is to build inside the country setting the price.
🎙️ Listen to today's Automotive State of the Union episode for the complete discussion.
If Stellantis and Lexus are both bending, "join them" may already be the default strategy nobody's said out loud yet.
Two very different companies, one built on European brand heritage, one built on Japanese manufacturing precision, arrived at the same conclusion from different directions. Dunne's read is blunt: American automakers have spent this fight playing defense, and nobody wins a war that way. Whether Detroit's answer looks anything like Stellantis's or Lexus's is the question his new book is built to answer.
