A top Dongfeng executive said the Chinese automaker is still weighing the benefits of investing in loss-making PSA Peugeot Citroen, hinting that a deal with the French carmaker could take a long time.
We all know about the report that PSA is preparing a 3 billion euro ($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 % of the troubled carmaker.
The sources that tipped the proposed investment plan also said the French hope to conclude the deal this year. However, 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 euro ($6.90 billion).”
To illustrate the complexity of such a transaction, Zhu cited a recent deal in which Volvo acquired a 45 % stake in Dongfeng’s commercial vehicle unit.
“Regarding the strategic alliance between Dongfeng and Volvo, we made preparations for several years before reaching a consensus. We both agreed that we would greatly benefit each other.”
Zhu also reiterated Dongfeng’s global ambition, saying that there was an unstoppable trend for Chinese automakers to expand overseas, despite headwinds including low awareness of Chinese brands, inexperience in international operations and trade protectionism.
) - Monday, October 28th, 2013 - filed under Citroen
. Image credit: .
Discuss: Dongfeng still valuing benefits of Peugeot investment