Dongfeng says it won’t take control of PSA Peugeot-Citroen

Dongfeng Motor CEO Zhu Fushou told French newspaper L'Alsace that the Chinese firm's interest in PSA Peugeot-Citroen is to help it compete more strongly in its own domestic market, while also assisting the French company in finding its feet once more.

"It is a win-win cooperation, not a purchase deal but a way to help PSA return to growth," Fushou said. Dongfeng and the French government will both take 14 per cent takes in PSA at a cost of 800 million euros each ($1.23b), while the holding of the company's founders, the Peugeot family, will drop from 25 per cent to 14 per cent.

"The goal is not limited to the Chinese domestic market, it is also to conquer the whole Asia-Pacific market," Fushou is quoted as saying.

CarAdvice has contacted the local distributor for Peugeot and Citroen in Australia, Sime Darby, for comment on whether that could mean Chinese-built Peugeot's will be sold locally.

PSA Peugeot-Citroen has been allied with Dongfeng for 22 years, and as a conglomerate produced 550,000 cars in China in 2013. Dongfeng says it aims to increase that number to 1.5m in the coming years.

In Europe, it appears that PSA Peugeot-Citroen will scale back its operations. Newly appointed CEO Carlos Tavares told Autocar the company needs to increase profits, cut supplier costs and lower stock levels.

"Remember, we want to maintain our position as a generalist manufacturer. That’s the first thing," Tavares said. "But we will be more selective with what we build in future. We won’t invest where there is no business.

"Everything I’ve learned tells me we must make cars to beat the competition, so buyers will want that car, not just a car. We have not yet identified models to drop, but there will definitely be a reduction," he said.

PSA Peugeot-Citroen reported losses in Europe in 2013 of 2.32 billion euros ($3.58b), an improvement on its 2012 loss of 5.01b euros ($7.73b).