PSA's Negotiations with Chang'an for Second Chinese JV Advancing

PSA Peugeot-Citroen is negotiating with Chang’an Motor Corp, China’s fourth-largest automaker, to create the French company’s second joint venture in China, with the contract expected to be signed shortly after the upcoming Spring Festival,as China Daily reports.

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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About the author: Andrei Tutu
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