Dongfeng Peugeot subsidizes dealers amid crisis

Shanghai, January 5 (Gasgoo.com) Dongfeng Peugeot, a joint venture between Dongfeng Motor and PSA Peugeot Citroen, has considerably subsidized its 160 or more dealers in China to ease the network pressure and boost their profit-making ability amid the financial crisis, said Tang Teng, vice general manager of the JV, to The Beijing News last week.

At the end of 2008, Dongfeng Peugeot gave each dealer the cash ranging from tens of thousands to millions of yuan as financial support. The amount of money is determined by Dongfeng Peugeot's market share in the region, the dealer's investment and business improvement over 2007. The money is not directly linked to the sales volume or deliveries, Tang said.

Last year, three of the eight Dongfeng Peugeot dealers in Beijing had business or financial problems, and the joint venture’s Beijing sales were most heavily hit by the financial crisis starting in late 2008. However, about 90% of the more than 160 Dongfeng Peugeot dealerships had normal operation last year and over 70% made profits or broke even.

Its sales in Beijing only account for 2% of Dongfeng Peugeot's nationwide sales, and Beijing dealers had little improved their operations. Dongfeng Peugeot will try to boost the profit-making ability of its dealers as a top business priority for 2009. A commission of dealers will be set up to advise on the introduction of new products.

Dongfeng Peugeot expects its sales in 2009 to grow by 20-30% by relying on two new vehicle models, but it will be cautious about launching any new model in the first half of the year. As the government's incentive measures will translate consumer confidence into action in the second half, Dongfeng Peugeot may adjust its new model output plan in late 2009.