PSA/Peugeot-Citroen is negotiating with China’s Dongfeng Motor to expand their partnership in the world’s largest car market. PSA CEO Philippe Varin told reporters attending the opening of a new factory in Shenzhen, China, on Saturday that the French company is seriously considering selling equity to Dongfeng to fund expansion outside of Europe. The sale could diminish the holdings of the Peugeot family, which holds slightly more than a quarter of PSA shares, below a controlling stake in the French automaker. Earlier this year, Reuters had reported that the Peugeots were willing to relinquish control so that GM could take a larger stake in PSA, though General Motors has since indicated that they don’t plan to increase their holdings in PSA.
PSA now has three factories in China under a joint venture with Dongfeng and Varin was in China for the launch of their fourth Chinese facility, a joint venture with the Chang’An Automobile Group in the southern Chinese city of Shenzhen where PSA will locally assemble the luxury DS series. Including the new factory PSA will have capacity to build almost a million cars a year in China, more than double last year’s sales of 442,000 units in the country.
Responding to the news about a financial tie-up between PSA and Dongfeng, General Motors’ vice chairman Steven Girsky said that the deal involving Dongfeng taking an equity stake in PSA would not affect GM’s partnership with PSA. “We’re not PSA’s only partner so I don’t think it would complicate our situation any more than it would complicate some of their other partners,” Girsky said in New York on Friday. GM bought a 7% stake in PSAas part of its plan to right its European operations.
Girsky said that the affect of the PSA-Dongfeng capital relationship on GM’s own tie-up with PSA would ultimately depend on how much influence the Chinese automaker had on the partnership and on where the vehicles jointly made by PSA and Dongfeng would be sold.
The GM vice chairman reaffirmed GM’s position that right now it will keep it’s investment in PSA at 7% of the equity of the French company. “We bought our 7 percent in the first place not because we wanted significant influence in PSA, but because we wanted to help them with their capital raise at the time,” he said.
Girsky said that the priority of the alliance with PSA is fixing GM’s European operations not finance. GM and PSA have previously announced that they will be jointly developing a minvan platform and it’s been reported that GM would like PSA and Opel to be somewhat integrated.