PSA ties up with China's Hafei Motor via Dongfeng

Shanghai, May 29 (Gasgoo.com) Sources from Dongfeng Motor said that the partnership between Peugeot Citroen and Hafei Motor has come in a new direction. PSA and Hafei will build with PSA's current partner Dongfeng a joint venture in southern Chinese city of Shenzhen (near Hong Kong) for producing small cars such Peugeot 107 and Citroen CI. Of this three-party joint venture, PSA has 40% stake , Hafei 40% and Dongfeng 20%.

In June 2007, PSA Peugeot-Citroen and Chinese carmaker Hafei signed a memorandum of understanding to start a feasibility study of a 50-50 joint venture for making a range of small cars at Hafei's plant in Shenzhen for the Chinese market. But PSA Peugeot-Citroën currently operates in China through another joint-venture (Dongfeng Peugeot Citroen Auto) with Dongfeng Motor, the third largest carmaker in China, and the Chinese government has required the French automaker to partner with Hafei through the big partner Dongfeng Motor, just like U.S. automaker GM partners with Wuling via SAIC.

Le Wannian, corporate communications manager of PSA China, confirmed earlier this week that the joint venture proceeding between PSA and Hafei Motor would be postponed due to the intervention of Dongfeng Motor. Although the cooperative memo was signed by the two parties nearly one year ago, the new partnership has to go through the review and approval of China's auto industry regulators, a byzantine process which will take a long time.

Hafei Motor, a subsidiary of Harbin Aircraft Manufacturing Corporation, is a leading minivan maker and a national small motor vehicles source in China. As reported, Dongfeng intended to purchase Hafei by the end of 2007 and then took part in the joint venture negotiation between PSA and Hafei.