Dongfeng Motor has no intentions to take control of PSA/Peugeot-Citroen, chief executive Zhu Fushou has said as he tries to dismiss a controversy over a planned purchase of a 14 percent stake in the French carmaker. In an interview with L'Alsace newspaper, Fushou said that Dongfeng's investment in PSA is a long-term strategy that will help the French carmaker increase sales outside Europe while allowing the Chinese group to compete better with local rivals in China.
Fushou noted that the agreement is a “win-win cooperation,” adding that it is not a purchase deal but a way to help PSA return to growth. PSA unveiled in February a EUR3 billion ($4.1 billion) capital hike in which Dongfeng and the French state will pour in EUR800 million for 14 percent of the carmaker.
The deal will have the founding Peugeot family's stake drop to 14 percent from the current 25 percent holdings and 38 percent of voting rights. According to Fushou, the stake purchase of Dongfeng and the French government will allow PSA to meet its cash requirements for the next three years while it tries to develop markets outside Europe and implement a recovery plan.
He said that Dongfeng and PSA targets to hike annual vehicle sales at their Chinese joint venture to 1.5 million from 550,000 in 2013. "The goal is not limited to the Chinese domestic market, it is also conquer the whole Asia-Pacific market," Fushou said.
He remarked that Dongfeng will help PSA cut its reliance in Europe to less than 50 percent of total sales from the current 62 percent. On the hand, PSA will help Dongfeng better compete with Chinese rivals. Dongfeng launched its own brand in 2009 and sold over 650,000 vehicles in 2013. [source: automotive news - sub. required]