Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
    • Browse photos from the 2021 awards ceremony
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • TUV Rheinland: Battery testing center for large battery packs and more
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automotive News Europe
June 09, 2017 01:00 AM

PSA seeks to fix China business with new DS investment

Peter Sigal
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    PSA will launch the DS 7 Crossback SUV in China next year.

    PARIS -- PSA Group has taken steps toward rebuilding its Chinese operations, signing an agreement with Changan Automobile to invest 500 million euros in the companies' joint venture and boost production at the underutilized DS plant in Shenzhen.

    PSA and Changan said on Thursday they will further deepen their cooperation started six years ago to establish DS upscale brand in China. Their new agreement will see:

    • Joint investment 500 million euros in 2017, shared equally between PSA and Changan.
    • Launching one new DS model a year on the Chinese market, starting in 2018 with the DS 7 Crossback SUV. Future models will include plug-in hybrids and a full-electric vehicle, by 2019. A similar rollout schedule is planned for DS models in Europe.
    • Establishing a regional DS headquarters in Shenzhen, with the goal of developing new export markets throughout Asia for Chinese-made vehicles and finding shared savings within the joint venture.
    • Boosting utilization levels at the PSA-Changhan plant in Shenzhen, which has an annual capacity of 200,000 units. Output in 2016 was 15,000 vehicles, down from 22,360 in 2015. A PSA spokeswoman said possibilities include adding light commercial vehicles and pickups to the mix as well as producing Changan's own models there.

    PSA has had difficulty to win and keep market share in China, as domestic manufacturers improved their products and cut prices, and consumer demand tilted in favor of SUVs and crossover vehicles. PSA's Chinese and Southeast Asia vehicle sales fell 48 percent in the first four months, with sales of the upscale DS brand plunging 67 percent in the region.

    New business model

    At the Shanghai auto show earlier this year, PSA CEO Carlos Tavares said that the company needed "a new business model" in China and to find more savings in purchasing, logistics and manufacturing. He has also vowed to lower production costs by 10 percent.

    Like many foreign automakers, PSA has two joint ventures with domestic producers in China. Its main initiative is in Wuhan with Dongfeng Motor, which currently holds a 13 percent share in PSA after a 2014 investment in the then-struggling French automaker. Last year, PSA and Dongfeng's joint venture factories produced 561,560 vehicles in China, down from 688,300 in 2015.

    PSA's joint venture with Changan, known as CAPSA, is much smaller than its tie-up with Dongfeng.

    PSA has produced only DS models at the Shenzhen site since it opened in 2013, including the DS 4, DS 5, DS 5LS and DS 6.

    CAPSA represented a negative contribution to PSA's balance sheet in 2016 of 292 million euros, including an operating loss of 29 million euros, versus a deficit of 50 million euros in 2015. PSA said the remainder of the negative margin in 2016 was due to a one-time write-down, or impairment, of earlier investments.

    In an interview last month with Automotive News Europe, DS CEO Yves Bonnefont acknowledged that competition in China was "getting fiercer and fiercer" but that he thought foreign automakers still held an edge over domestic producers in the premium segment. "We still have a little advantage, so we need to move fast," he said.

    The PSA spokeswoman said the automaker remained committed to adding a Southeast Asia production facility by 2018, even though the company recently lost a bid for a controlling share in the Malaysia's Proton to Geely.

    RECOMMENDED FOR YOU
    VW agrees to buy $4 billion worth of lidar components from Israel's Innoviz
    Recommended for You
    Innoviz Daily Drive.jpg
    VW agrees to buy $4 billion worth of lidar components from Israel's Innoviz
    2022 ANE Rising Stars winners
    Automotive News Europe awards the 2022 Rising Stars
    Andreas-Christoph Hofmann 2021 Eurostars
    Hyundai marketing VP Andreas-Christoph Hofmann to speak at Automotive News Europe Congress
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
        • Browse photos from the 2021 awards ceremony
    • More
      • Publishing Partners
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • TUV Rheinland: Battery testing center for large battery packs and more
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us