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Fiat Chrysler (FCA) and Peugeot-Citroen (Groupe PSA) have once again been revealed that they intend to merge, and as of the latest news, the two companies have agreed to merge. On the other hand, it was revealed that Changan Motor is listing to sell a 50% stake in Changan Peugeot Citroen Motor Co., Ltd. (Changan PSA). The transfer and sale information is posted on the official website of Chongqing United property Rights Trading. The pre-disclosure date is from October 28, 2019 to November 22, 2019.

The biggest asset in the stake is Changan PSA's factory in Shenzhen. In 2011, China Changan Automobile Group Co., Ltd. and France PSA Group jointly established Changan PSA, each accounting for 50% of the share capital. As one of the most invested joint ventures in China, Changan PSA mainly produces luxury car brand DS series models. According to the Shenzhen plant planning, the factory has an annual production capacity of 200000 vehicles. Changan PSA Shenzhen factory is also the strategic headquarters of DS brand in the Asia-Pacific region.

As soon as the news came out, the acquisition of the factory means that the DS brand is very likely to withdraw from the Chinese market. More media revealed, "Changan PSA Shenzhen factory will be acquired by Baoneng." At present, this matter is already an open secret internally, and it will be announced by officials soon. " Subsequently, the media asked the relevant people of Changan, DS and Baoneng, except Changan, there has been no reply so far.

For media speculation, the relevant person in charge of the PSA Group only denied the news that DS had withdrawn from the Chinese market, and did not mention that the Shenzhen factory was acquired by Baoneng. At the same time, he also said that "the DS brand will adopt a new development strategy in this strategic market."

Baoneng's acquisition of Changan PSA is also purposeful. According to Baoneng's plan to lead Yao Jianhua, cars will be Baoneng's core competitiveness in the next 20 years, and the latest goal is that automobile revenue must account for more than half of the group's revenue in 2027.

"the welding workshop of Changan PSA Shenzhen plant has the world's leading laser welding technology, with an automation rate of 98 per cent." People familiar with the Shenzhen factory said that the factory's final assembly line has up to 200 stations, and the factory's welding workshop can achieve 100% laser on-line inspection. It can be said that the DS7 production line of Changan PSA Shenzhen Factory is currently the most automated and advanced production line of PSA Group in the world.

However, in recent years, it is well known that French cars have been losing ground in the Chinese market. Citroen, as a symbol of entering China for a long time, has been in decline, not to mention that it has not been in China for a long time. And its brand awareness is still not high in the domestic "high-end" brand.

With the decline of the Chinese car market, the life of DS is becoming more and more difficult, with sales of only a few hundred units each. In March, the Peugeot-Citroen dealers of DS also greatly reduced the brand power of DS, and many DS dealers have begun to withdraw from the network. Such a factory in Shenzhen, with a capacity of 200000, is in vain.

Based on an annual capacity of 200000 vehicles, the actual capacity utilization of the Changan PSA Shenzhen plant in recent years is less than 10 per cent if it continues to produce only DS-branded models. After five years in China, DS has lost more than 1 billion yuan. The serious decline in DS sales is not only the biggest burden for PSA, but also the burden for Changan Automobile.

Under the pressure of Geely and Great Wall, the former independent brand champion Changan Automobile sold about 1.226 million vehicles in the first three quarters, down as much as 23.6% from the same period last year. At the same time, the unprecedented challenge of Changan Ford, the original profit cow, led to Changan Motor's cumulative revenue in the first three quarters of 45.115 billion yuan, down 9.5% from the same period last year, while the net profit belonging to shareholders of listed companies was-2.66 billion yuan, a decrease of 328.83% compared with the same period last year.

As long as the sales of DS can be a little better, not to mention that it can provide profits for Changan Automobile, if not slow down, it will not be as far as it is today. In order to avoid a drag on the performance of listed companies, Changan Automobile has not incorporated the performance of Changan PSA into its financial statements.

Now Fiat Chrysler (FCA) and Peugeot-Citroen (PSA) have also officially announced a merger to create the world's fourth-largest carmaker. The two sides will each have a 50 per cent stake in the combined company and will create a $50 billion car giant.

John Elkann, chairman of FCA, will serve as chairman of the combined group, while Carlos Tavares, chief executive of PSA, will serve as the new CEO.

Auto industry consolidation is a long-standing theme, especially in Europe. In Europe, with fierce market competition and strict emission regulations, it is difficult for automakers to make a profit. Carmakers are also under intense pressure to innovate in electric vehicles and self-driving technology, forcing traditional competitors to share the investment burden through cooperation.

At present, it is clear that the Shenzhen plant of Changan PSA will be sold. The sale of the Changan PSA factory in Shenzhen will also be reconsidered from one company to two companies, and the success of the project can only be announced by time. But DS will not withdraw from the Chinese market, perhaps there is no way to do so.

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