AutoBeta(AutoBeta.net)07/26 Report--

After the difficulties in the world's number one car market, PSA Group came up with the idea of cutting production capacity in China to reduce property losses.

Based on PSA's reluctance to leave China, PSA's chief financial officer said the group was working to cut capacity at DMC, a joint venture with local partner Dongfeng Motor, possibly by renting out plant facilities. However, after the relevant media learned about PSA China, PSA China did not say anything about it.

A management official of the group had previously told overseas media: "We will adjust our production system as needed." Production shifts at PSA Group's plants in China, especially in Wuhan, are expected to be reduced, while production lines may be shut down or sublet between industries.

At present, the Chinese market has objectively become the profit black hole of PSA Group's global business. On July 24th, PSA Group released its financial results for the first half of 2019, according to the data released, the group's recurrent operating profit reached 3.338 billion euros, an increase of 10.6%. Of this total, the recurrent operating profit of the automotive sector reached 2.657 billion euros, an increase of 12.6%.

However, the group posted a loss of 302 million euros in the first half, including 139 million euros in asset writedowns. Last year, PSA also lost 300 million euros locally.

In China, PSA Group's sales are declining faster than the overall market level. According to the China Automobile Association, PSA Group's cumulative sales in China in the first half of this year were less than 65000 vehicles, down 62.1% from the same period last year, while the overall sales volume of the Chinese automobile market fell by 12.4% in the same period. In fact, PSA Group's sales there have been declining for four years in a row.

In the first half of this year, PSA sold a total of 64169 vehicles in China and Southeast Asia, down 60.62% from the same period last year, and about 100000 vehicles in absolute terms compared with last year's stupid year. Among them, Peugeot's total sales fell 63.69% to 33068 vehicles, while Citroen brand sales fell 58% to 29123 vehicles, down 58% to 1758 vehicles, down 14.25%.

In 2014, the PSA Group set a record with 734000 units sold locally, and has fallen sharply for several years since then. In fact, after PSA Group and Dongfeng Motor signed a global strategic alliance agreement in March 2014, the two sides set a sales target of more than 1 million vehicles in 2017 and 1.5 million vehicles in 2020.

At present, PSA Group has five factories in China, including three in Wuhan, one in Chengdu and one in Shenzhen, which is used to produce Changan PSA's DS premium brand cars. According to the data, the cumulative production capacity of PSA in China reached 1.2 million units, but last year, the local production capacity of PSA was only about 250000 units.

This may be the most difficult time for PSA in China. To revive business in China in the future, the manufacturer has negotiated a series of reforms with its partners in China, including product updates, price brand value transmission, and measures to improve the profitability of joint ventures and dealer partners.

An Tiecheng, chairman of Shenlong Automobile Co., Ltd., said that the difficulties faced by DPCA will further return to its original heart and return to normal state through the efforts of shareholders of both sides.

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