PSA and Chang’an deep in JV talks

---

It is rumored that Chang’an Automobile and PSA are currently deep in talks to start a new joint venture in China
PSA have been in talks with various manufacturers since 2007 to start a second joint venture in China away from their sole partner, Dongfeng. Previously PSA were in talks with Hafei regarding a new JV, but apparently Dongfeng were not happy with PSA’s shopping for a new partner. A PSA insider was quoted by the Xin Kuai Bao newspaper as saying that Dongfeng were far from happy with the PSA-Hafei talks, and are certainly far from happy that PSA and Chang’an are now in talks since Hafei fell under the Chang’an umbrella.

A PSA-Chang’an deal is likely to be penned in after the Chinese new year, and will be operational sometime in 2011 according to media reports.

PSA is looking at China as a massive growth market, especially for its Peugeot brand which is aiming to sell 111,000 cars in China in 2010, and increase its 1.3% market share to something more respectable. Citroens growth in China has gone from being a market leader to a luke-warm situation, it could be that PSA are not happy with their Chinese partner, who do appear to be spread thin across their other JV’s, which include Nissan and Honda. On the other hand, PSA’s models have always been derided as being slightly behind its competitors in the technology area, and also the line up of Citroen and Peugeot have always been slightly anemic when compared to other companies.
PSA sold 270,000 cars in the Chinese market in 2009 which was an increase of 52%, and with 30,000 cars sold in one month alone. Citroen is the stronger of the two with sales of 159,900 cars sold in 2009, and Peugeot with 110,200 cars sold in 2009.