French automotive manufacturing firm PSA Group is reportedly preparing to sell its stake in its Chinese joint venture company with Chongqing Changan Automotive. The owner of automotive brands such as Peugeot, Vauxhall, and Citroen, currently has a 50 percent stake in the Chinese joint venture firm CAPSA, which builds cars for PSA's premium DS car brand.
Chongqing Changan Automotive was the first to reveal the PSA's plans when it mentioned in its regulatory findings earlier in the month that it was actively looking for buyers for half of the Shenzhen-based joint venture. PSA confirmed the news on Thursday when it mentioned that it was going to be selling all of its shares in its Chinese joint venture.
PSA's Chinese partner mentioned in its filing that it is setting an asking floor price of $232 million for the 50 percent stake in the joint venture.
PSA's decision to sell its stake in its Chinese joint venture was likely made given the company's struggling sales in the world's largest auto market. CAPSA reportedly experienced significant drops in sales numbers over the past few months, partly due to the overall contraction of China's car market.
Apart from selling its shares in CAPSA, PSA Group also announced plans to cut jobs in its Chinese facilities. The company also plans to shut down two of its four assembly plants in China, facilities that were established as a joint venture project with Dongfeng Group. The two facilities mainly produce Peugeot and Citroen-branded vehicles for the company in China.
Despite its selloff of its stake CAPSA, PSA confirmed that it still plans to continue producing DS-branded vehicles in China. A company spokesman stated that the French company does have a new "strategic plan" to achieve its goals. The company plans to present the new plan in the coming "weeks or months."
While both companies are still looking for a suitable buyer for the 50 percent stake, CAPSA will reportedly still continue building DS-branded vehicles in its Shenzhen manufacturing facility. PSA still has to present its sales plan to the French unions, which is reportedly will do it on Friday this week.
Prior to establishing the Chinese joint venture, PSA had laid out a goal for itself to sell at least 1 million vehicles per year in China. Unfortunately, the company has yet to even come close to that figure. In 2018, PSA reported total vehicle sales of 262,583 units in China. This was a 32 percent drop when compared to its sales numbers over the previous year.
