Dongfeng plans to take over Hafei Auto, government official confirms

Shanghai. December 3 (Gasgoo.com) – Dongfeng may plan to offer 2 billion yuan ($270.54 million) to buy at least 50 percent stakes of Hafei Group, Chinese newspaper 21^st Century Business report reported yesterday.

 

Citing an unnamed source from Hafei Group, the report said PSA Peugeot Citroen’s plan to cooperate with Hafei has been scrapped. However, Hafei Group’s owner AviChina Industry & Technology Company is in talks with Dong Auto Group, which offers 2 billion yuan ($270.54 million) to take over at least 50 percent stakes of Hafei Group.

 

Separately, a National Development and Reform Commission official confirmed to the newspaper that the talks between Dongfeng and Hafei’s owner has been going on for months.

 

However, senior officials from both side declined to comment on the possible tie-up.

PSA Peugeot Citroen and Hafei Group signed a memorandum of understanding in July that the two parties will create a 50-50 joint venture to manufacture and sell vans with ten seats or less in Shenzhen.

Denis Duchesne, CEO of the French carmaker's China operations, said the vans will be made under the Peugeot, Citroen and Hafei badges with an initial capacity of 100,000 units a year. Currently Hafei's production base in Shenzhen already has a production capacity of 100,000 units. The tie-up with Hafei is PSA Peugeot Citroen's latest drive to boost its China sales to 600,000 vehicles in 2010 from 200,000 units last year, Duchesne said.

The French carmaker currently assembles cars in the central city of Wuhan with Dongfeng Motor Corp, China's No. 3 auto group. However, it is still lagging behind its rivals in terms of China sales. General Motors, Volkswagen, Toyota and Honda all run two vehicle ventures in the country with local partners.