AutoBeta(AutoBeta.net)08/03 Report--

PSA Group (Peugeot-Citroen) recently announced a profit for the first half of 2020, with a net profit of 595 million euros (about 4.876 billion yuan) attributable to the parent company. Under the continuing influence of COVID-19 's epidemic, the company is clearly in better shape than many carmakers. But at the same time, PSA Group's business in China is losing money.

On August 3, Dongfeng Group issued an announcement and learned from the financial report of PSA Group that in the first half of 2020, the operating income of the company's joint venture Citroen Motor Co., Ltd. and Dongfeng Peugeot Citroen Motor sales Co., Ltd. was 3 billion yuan, a decrease of 57.5% over the same period last year, and a loss of 1.3 billion yuan, a decrease of 48.66%.

Judging from the financial statements, the loss amount of DPCA is gradually shrinking, but the current situation of continuous loss-making operation has not changed. In the first half of the year, Wuhan-based DPCA was forced into operational stagnation, production activities and sales operations were severely hit, and performance deterioration was inevitable. Data show that DPCA sold a total of 23237 new cars in the first half of the year, down 63.13% from the same period last year.

According to the current situation, there is still a lot of uncertainty about whether DPCA, which has a "dual brand", will break 100000 in 2020. For a joint venture brand in the Chinese market, falling below 100000 vehicles is a warning line or faces great operational risks. DPCA's sales plunged 55 per cent to 113600 in 2019, compared with a peak of 704800 in 2015 a few years ago.

The survival situation of French brands in the Chinese market is worrying. After the delisting of Dongfeng Renault, the joint venture company of DS brand is also resold to Baoneng Automobile, while the development of Shenlong Automobile is also not optimistic. Has been questioned by the outside world, PSA Group has repeatedly stated in some public occasions, Peugeot Citroen brand will not withdraw from the Chinese market, Dragon Motor will not be disbanded. At present, PSA Group and Dongfeng have signed the term of the joint venture with DPCA until 2037.

In order to save its performance in the Chinese market, DPCA has accelerated the launch of new models in order to change the status quo that the products are not recognized by consumers. In 2020, Dongfeng Peugeot brand new 2008, Dongfeng Citroen C3L have been listed, and a number of models have also been launched. Zhang Zutong, deputy general manager of Dongfeng Automobile Group, said that for the decline in sales, DPCA has also taken some measures in the past, but the result is not very ideal, but DPCA cannot dwell too much on the past. The real problem is that the goods are more Chinese. To make PSA's product technology closer to the Chinese market, it mainly lies in three elements, including products, brands and management efficiency.

At the same time, the Dragon launched the streamlining program. After the resumption of work, DPCA restarted employees to compete for jobs, this time aimed at front-line employees, involving a total of more than 5000 employees. It is reported that the competition for posts or staff reduction of 30%. DPCA insiders said the resumption of the competition was a continuation of the plan, which had planned to reduce the total number of employees from 8000 to 5000 in 2019, but was shelved for various reasons. In addition, the spare capacity of DPCA has been disposed of, and relevant documents show that the management committee of Wuhan Economic Development Zone disposed of DPCA's first factory assets in the form of government storage, and plans to exempt DPCA from property tax and land use tax in 2020.

Significantly reduce the size of the business to reduce losses, Dragon Motor loss has been reduced, but in the face of product and sales problems, Dragon Motor still faces great challenges. How long can PSA Group, which is struggling in the Chinese market, last if it fails to reverse the decline in sales?

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