PSA will provide financial support to Dongfeng JV

PSA will provide financial support to Dongfeng JV

October 2, 2020 0 By autotimesnews

PSA Group will provide assistance to rescue and revive a joint venture with Dongfeng Motor Group, which has experienced long-term financial difficulties.

The French automaker, which is in the process of merging with Fiat Chrysler Automobiles, said this week it will provide 50 million euros ($ 58.5 million) in the fourth quarter to be used as working capital.

In the first quarter of 2021, he, together with Dongfeng, will make additional investments to recapitalize the joint venture, PSA added, but where exactly the investments will go is not reported.

From 2020 to 2037, PSA will provide up to 100 million yuan ($ 14.7 million) each year to help the joint venture marketing, brand building and expanding its dealer network.

PSA and Dongfeng formed the Dongfeng Peugeot Citroen joint venture in Wuhan, China in 1992 to manufacture and sell passenger cars under the Peugeot and Citroen brands.

Dongfeng Peugeot Citroen is the only PSA manufacturing facility operating in China after the French automaker ended a loss-making partnership with Changan Automobile Co. at the end of 2019. In 2019, sales of the joint venture fell to 113,600 units.

In the first eight months of this year, shipments fell 63 percent to 29,693 units. Dongfeng Peugeot Citroen suffers annual losses due to the decline in sales of Dongfeng. In the first six months, he lost another 1.3 billion yuan.