Other top worldwide automotive producers such as Volkswagen General Motors, Toyota and Honda already use the “bi-joint-venture” business scheme in China. PSA Peugeot-Citroen is already in a partnership with Dongfeng Motor Corp, the third-biggest auto group in China. This was established in 1992 but failed to meet the expectations. In 2009 Dongfeng Motor Corp’s sales saw a 52 percent increase while the French manufacturer was far from its competition in term of financial success.
The French company has decided to establish a second partnership in China in 2004 and saw Hafei, a local microvan maker, as a potential partner. As the latter was taken over by Chang’an Motor Corp last year, the negotiation went on with the new owner.
According to the aforementioned source, the new joint-business is expected to be based in the southern city of Shenzen, where Hafei already has a production site.
This new tie-up could allow PSA Peugeot-Citroen to take full advantage of the rapidly-growing Chinese market - China became the largest automotive market in 2009. For the French company, China is the second largest market after its domestic one. PSA Peugeot-Citroen has set a target to increase its current 3.6 market share in China to 8 percent by 2016.
The joint-venture would also be profitable for the Chinese automaker, as the French manufacturer’s main products have a greater profit margin than its own.
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