PSA, Hafei tie-up talks end up in failure

Shanghai. January 30 (Gasgoo.com) – French automaker PSA and Chinese automaker Hafei Group’s cooperation negotiation has ended up in a failure, Chinese media 21^st Century Business New reported today.

 

Major opposition for the possible tie-up between PSA and Hafei comes from PSA’s Chinese partnership Dongfeng Group, which is also seeking a partnership with Hafei Group, the report said.

 

Dongfeng Group believes instead of seeking another partnership, PSA should focus exclusively on its current joint venture with Dongfeng Group. “PSA should do a better job at Dongfeng PSA before it moves to take on another partnership,” a Dongfeng Group official said.

 

"It is possible that our partnership project with Hafei Group may be scrapped,” said Wang Lenian, spokesperson of PSA China. “After all, our success in China hinges on its cooperation with Dongfeng Group.

 

Last year, Dongfeng PSA sold 207,255 vehicles in Chinese market, up 3 percent from one year earlier. Not only is this growth rate much lower than a projected growth rate of 30 percent, but also much lower than the industry’s average growth rate of 22 percent.

 

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 would 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 part of PSA Peugeot Citroen's latest efforts to boost its China sales to 600,000 vehicles in 2010 from 200,000 units last year, Duchesne said.