News of November 21, 2001
PSA Peugeot CitroŽn and Dong Feng Motors expand their cooperation to produce and market new CitroŽn and Peugeot vehicles in China
Jean-Martin Folz, CEO of the PSA Peugeot CitroŽn Group, and Miao Wei, President of Dong Feng Motors, signed an agreement today in Beijing that opens a second phase of cooperation between the two companies and will allow a substantial increase in the production and sale of CitroŽn and Peugeot vehicles.
The two companies began cooperating in 1992 and have achieved significant results. Their joint venture, Dong Feng CitroŽn Automobile Company (DCAC), has a modern and efficient assembly plant in Wuhan (Hubei province), with an annual capacity of 150,000 vehicles, and an engine and gearbox production plant in Xiang Fan.
DCAC currently produces the CitroŽn ZX Fukang, which has become very popular in China thanks to its reliability and high quality. So far, some 230,000 Fukangs have been sold, making for a market share of 9% in 2000. The company has also started to produce and market the CitroŽn Picasso, with a sales target of 10,000 units for 2002. DCAC has a network of 480 sales and service outlets that handle sales and maintenance for CitroŽn vehicles throughout China.
The joint ventureís shareholders are Dong Feng Motors (31%), Automobiles CitroŽn (26.9%), Chinese banks (39%) and French banks (3.1%). DCAC has been profit-making since the second half of 1999. Net income totaled 699 million Yuan Renmimbi (94.4 million of euros) in 2000.
The new phase of cooperation launched today commits the entire PSA Peugeot CitroŽn group alongside Dong Feng Motors. In particular, it plans for the introduction of the Peugeot marque. The agreement includes several sections.
In terms of manufacturing, PSA Peugeot CitroŽnís new platform 2 will be installed in the Wuhan plant. The Peugeot 307 was the first vehicle to come off this platform a few months ago in Europe. Another group platform for smaller cars will be introduced in Wuhan in the next few years. At the same time, production of the new 1.6 to 2-liter gasoline engines will be launched at the Xiang Fan plant.
An ambitious product plan has been set up. It calls for the introduction of new CitroŽn and Peugeot automobiles each year starting in 2002. As a result, the product lineup in Wuhan will include six cars in 2004, plus imported models from the two marques. A sales target of 100,000 vehicles has been set as soon as 2003.
In keeping with PSA Peugeot CitroŽnís general organizational structure, three joint ventures will support this new phase of cooperation: a manufacturing joint venture, comprising the Wuhan and Xiang Fan plants, and two marketing joint ventures, one in charge of selling CitroŽn vehicles and the other responsible for selling Peugeot cars.
To finance the investment of this second phase of cooperation, the partners have decided to increase the capital of the manufacturing joint venture by one billion Yuan Renminbi (140 million of euros. PSA Peugeot CitroŽn will contribute 630 million Yuan Renminbi (88.2 million of euros) and Dong Feng Motors 370 million (51.8 million of euros). Following this transaction, each partner will hold 32% of the capital alongside Chinese and French banks.
(November 15, 2001)