Dongfeng Invests into 800 Million Euros into PSA, Will Found



Chinese automobile brands have accelerated overseas market development. Dongfeng Group has invested 800 million euros into PSA. Both of them shall sign global strategy alliance contract at Beijing.

Recently, stake holder of PSA has approved 3 billion euros capital increase, which smooth the cooperation of France Government and Chinese Dongfeng Automobile Group. TANG Weishi, new CEO of PSA has announced “BACK IN THE RACE” plan to take back PSA to profitability. Chinese market plans an important role. TANG Weishi joins Biejing Auto Exhibition of year 2014 by himself, and stand for PSA stage himself. It explains everything.

According to the contract, Dongfeng Group shall invest 800 million euros into PSA by targeted placement and allotted stocks. The group will hold about 14% shares of PSA and bring Dongfeng as one of the largest holders with France government and Peugeotfamily. The cooperation includes 3 directions: found a joint venture in Wuhan of China- DPAC development, which shall realize 1.5 million sales up t0 year 2020. Besides, found a research center together in China. And found a new joint venture.

TANG Weishi, just after 2 weeks appointment, has published PSA development strategy for year 2014 to 2018—BACK IN THE RACE to response for 2 years huge loss.

As early as the next half year of last year, LIU Weidong, negotiation leader of Dongfeng has leaded cooperation solution after Dongfeng investment. According to the plan, Dongfeng will merge PSA Asia-Pacific research center located in Shanghai. Besides, Dongfeng shall found a new value chain research system with PSA.

The strategy includes 3 indexes. Cash flow of regular business shall turn to positive not late than year 2016. Free cash flow of group operation shall reach 2 billion euros during year 2016 to 2018. In year 2018, the gross profit of finished automobile shall reach 2%, and middle term goal shall be 5% which covers year 2019 to 2023.

On manufacture aspect, Dongfeng,Peugeot and Citroen will outsource to DPAC. Finally, annualproduction of the 3 brands shall reach 500 thousands. Each brand will introduce at least 1 new car into market. Meanwhile, Dongfeng will share the oversea plant of PSA as well. ZHU Fushou takes the cooperation with PSA as “globally value chain cooperation”, which includes research, manufacture, purchase and the entire chain cooperation.

Besides, it is the first time to make sure that DS becomes the third brands with Citroen and Peugeot of PSA, and is the only high-end brand. It stresses that DS is the only brand that PSA shall invest more resource into and develop more modes for it.

According to the contract, both sides shall found a new joint venture together, which in charge of DPAC and PSA sales overseas out of China . It is also possible for other emerging market development.

The key for Chinese market is the triple capacity increase of cooperation between PSA and Dongfeng. According to the plan, DPAC, the joint venture of PSA and Dongfeng shall realize 1.5 million car sales up to year 2020. Dongfeng Peugeot and Dongfeng Citroen shall take about 1 million car sales. Dongfeng owned brand shall take another 500 thousands sales. It is obviously that TANG Weishi has abandoned Valin 5% market share goal, and instead with more directly sales goal.

About sales channel aspect, it will found sales company for Asia-Pacific area for DPAC, Dongfeng and PSA product sales, particularly into ASEAN. DPAC has exclusive authorize for all product sales of Peugeot and Citroen. PSA new product introduced into Chinese market shall be included into DPAC sales channel.

TANG Weishi stands for Citroen this year at Beijing Auto Exhibition. The first SUV concept car of Dongfeng Citroen is a single of PSA in China. With the BACK IN THE RACE plan initialing, it shall be the most new cars introducing year for PSA, which reaches 14 new cars. It includes 6 new cars of Citroen, 6 new cars of Peugeot and 2 new cars for DS. What’s moreinteresting, there are as many as 6 new cars of the 14 new ones. There isPeugeot 2008, middle size SUV Peugeot 6008 which shall launch market at the end this year, small SUV of Citroen share platform with 2008./

With the contact signed up, board of visitors of PSA top level is adjusted step by step. According to plan, XU Ping, president of Dongfeng Group will take vice president of board of visitors of PSA. LIU Weidong, vice general manager of Dongfeng Group will take president of Asian business commission.

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