Summary: Increased cooperation between Peugeot and Citroen in China

Gasgoo.com (Shanghai) - As reports of increased cooperation between PSA's two brands, Peugeot and Citroën, continue to appear, the media spotlight in China is centering in on the Dongfeng Peugeot Citroën joint venture (commonly abbreviated as Dongfeng Peugeot). As a sales channel to one of PSA's most important markets worldwide, Dongfeng Peugeot's is of key importance to the French manufacturer. In comparison with its European operations, there is a relatively high degree of independence between Peugeot and Citroën in China, with each brand employing individual management and staff. By contrast, there is a single general manager in head of business development, sales and marketing for the two brands in every one of PSA's European markets.

Independent industry analyst Jia Xinguang believes that increased cooperation between the two brands is an inevitable part of Dongfeng Peugeot's future. "In China, this sort of brand integration is even more important." According to Mr. Jia, the increased costs associated with the introduction of the new Changan PSA JV are forcing PSA to consider how to cut down its production and management costs in China. Increased collaboration between the two brands would be a relatively straightforward way to achieve this end.

According to various reports, if PSA decides to tighten ties between the brands in China, all of Dongfeng Peugeot's Peugeot and Citroën operations would be axed. A new JV by the name of Dongfeng PSA, with unified management, financial, HR, technical and other staff, would replace them. However, the Dongfeng Peugeot and Citroën sales networks would continue to remain independent.

Mr. Jia believes such a move would not be hard for PSA to implement. "When looking at [PSA's] products, the Peugeot and Citroën brands use the same platforms," he points out, adding that other aspects, such as accessories and aftermarket services, were also shared between the two brands.

Mr. Jia believes that the severance between the two brands in China, which has its roots in their separate introductions to the country in 1992 for Citroën and 2004 for Peugeot, has created a lot of unnecessary waste in terms of manpower and resources for PSA. If PSA and Dongfeng Peugeot can find a way to streamline their businesses, it will be of great aid to their long-term plans for the Chinese market.