Dongfeng eyes gains in PSA investment
Print Edition
China’s Dongfeng Motor Group is still weighing the benefits of investing in loss-making PSA Peugeot Citroen, a top Dongfeng executive said, hinting that a deal with the French carmaker could take a long time.
PSA is preparing a 3 billion euro (US$4 billion) capital increase, in which Chinese partner Dongfeng and the French government will each contribute 1.5 billion euros and acquire 20 to 30 percent of the troubled carmaker, sources with knowledge of the plan told Reuters earlier this month.
The sources added that Peugeot hopes to conclude the deal this year.
But at an industry forum in Shanghai at the weekend, Dongfeng’s general manager Zhu Fushou suggested that China’s second-biggest vehicle maker is not in a hurry to make that investment.
“If we can complement each other’s advantages, if we can achieve synergies, we may go ahead to do it. Otherwise, we would not do it,” Zhu said.
“As a partner, we are surely concerned about the overall business of PSA. Last year, it made a net loss of 5 billion euros (US$6.9 billion).”
To illustrate the complexity of such a transaction, Zhu cited a recent deal in which Volvo bought 45 percent in Dongfeng’s commercial vehicle unit.
“Regarding the strategic alliance between Dongfeng and Volvo, we made preparations for several years before reaching a consensus.”
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