AutoBeta(AutoBeta.net)12/26 Report--

After Fiat Chrysler Group (FCA) and France's Peugeot Citroen Group (PSA) reached a merger plan, Dongfeng Motor, the third largest shareholder of PSA Group, chose to reduce its stake in PSA to help PSA and FCA merge smoothly.

It is understood that Dongfeng Motor holds a 12.2% stake in PSA Group, worth about 2.2 billion euros. After FCA and PSA set up a new company, Dongfeng Motor will have a 4.5% stake in the new company.

Lu Haitao, deputy general manager of the strategic planning department of Dongfeng Motor Group Co., Ltd., responded to the reduction of PSA shares, saying that Dongfeng has always supported the merger of PSA and FCA, and that Dongfeng's shareholder position in PSA and the seat on the board of supervisors will not change after Dongfeng reduces its stake in PSA.

At the same time, there are media reports that Dongfeng Motor has reached an agreement with PSA Group to extend the term of the joint venture Shenlong Automobile and plans to introduce the Opel brand to the Chinese market. If the two sides agree, DPCA will have the exclusive right to the brand and benefit from the new technology and intellectual property rights of the new company after the merger, but it is still unknown when and how.

Peugeot Citroen has not commented on the above reports.

The Opel brand is no stranger to Chinese consumers. It is understood that Opel first entered the Chinese market in 1993, bringing Yingsuya, Saifei and other models. Opel finally withdrew from the Chinese market in 2015 because of persistent losses and has since entered the Chinese market as an import. PSA bought the Opel / Vauxhall brand from GM in 2017 and led Opel to turn a profit in 2018. In the first half of this year, Opel, including the Vauxhall brand, made a profit of 700 million euros.

Turn to DPCA, a joint venture between Dongfeng Motor and PSA Group in 1992. In terms of time, DPCA and Opel entered the Chinese market very close, and as the first joint venture to enter the Chinese market, DPCA had a glorious moment.

In 2014, DPCA sales reached 704000, an increase of 28% over the same period last year; in 2015, DPCA sales peaked at 704800.

However, due to product positioning, technology and product problems, DPCA sales began to fall off a cliff in 2016, with sales of only 250000 vehicles in 2018, compared with 109852 in the first November of this year, down 54.0 per cent from a year earlier.

The sharp decline in sales led to accelerated losses. According to the results released by Dongfeng Motor, the combined revenue of DMC and DMC in the first half of the year was 7.05 billion yuan, down 59.7% from the same period last year. The net profit belonging to shareholders of the listed company was-2.53 billion yuan. DPCA has made a cumulative loss of 6.2 billion yuan in the past 18 months.

In the face of falling sales and profit losses, DPCA began to rein in costs, closing a factory in Wuhan and selling a second plant in Wuhan, leaving Wuhan No. 3 and Chengdu plants to continue production operations and drawing up a series of layoffs.

In September this year, DPCA issued a "yuan" revival plan. Through the efforts of Peiyuan, Guyuan and Tuoyuan, the overall sales reached 400000 vehicles.

Obviously, if DPCA gets the exclusive rights to the Opel brand, it will help DPCA bring more product lines and make full use of idle production capacity. Opel is also living a good life in foreign markets, under the leadership of the PSA Group to turn losses into profits, after entering the Chinese market, to a large extent, it can bring higher profits for PSA.

It is worth noting that under the continuous loss of sales and profits of Opel, Opel, which withdrew from the Chinese market and re-entered the Chinese market, under the leadership of Dongfeng Motor, whether it will repeat the same mistake or catch up from behind, there are still many unknown expectations of its development. It is a huge test for both Dongfeng Motor and PSA Group.

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