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Peugeot-Citroen and partner Dongfeng have agreed to cut thousands of jobs in China while "abandoning" two assembly plants in Wuhan No. 1 and No. 2, Reuters reported, citing an internal document. The move is aimed at curbing huge losses as soon as possible in the face of depressed sales.

Last month, Carlos Tavares, global president of Peugeot-Citroen, reached an agreement with Zhu Yanfeng, chairman of Dongfeng Motor, to close a plant in Wuhan and sell one, cutting the total number of employees in half to 4000, according to documents.

Earlier, the media quoted people familiar with the matter as saying that Dongfeng was exploring options for its stake in Peugeot-Citroen (PSA) to discuss how to cash out some or all of its stake in PSA, a French car manufacturing trademark. The company is exploring possible options for its shares, including a stake sale.

As for this news, some media verified the relevant person in charge of corporate communication in PSA China and the Asia-Pacific region, and the other side said that the news was a rumor, and that the internal did not get any relevant information, and the sale of PSA shares was false news, and did not make any evaluation on the "rumor." In addition, a Peugeot-Citroen spokesman only said: "We are working with partners to comprehensively improve the overall performance of our business in China."

"the restructuring agreement may prevent Peugeot Citroen from the risk of withdrawing from Citroen." Mr Tang has hinted that Peugeot Citroen may withdraw from its 27-year partnership with Dongfeng, or even leave China altogether, the two sources said.

Whether the news is rumor or not, judging from the current development of PSA in China, PSA's market share in China is shrinking. The performance of DPCA has been declining year after year, and all kinds of factory closures and layoffs have been exposed.

Shenlong, whose sales have continued to decline, fell to a new low last year. In 2018, DPCA sold 255000 vehicles, down 33% from a year earlier, the lowest level since 2009, and annual deliveries by foreign companies have declined steadily over the past three years. The performance in the first half of the year decreased by about 59.7% from the same period last year, resulting in a loss of 325 million euros (about 2.489 billion yuan).

DPCA's performance fell 64 per cent in 2018 compared with a record peak of 711000 in 2015. Now in the general environment of the decline of China's passenger car market, it is even more difficult for DPCA to recover to a high position no matter how hard it is.

Earlier, a spokesman for Peugeot-Citroen said it would not give up the Chinese market and was still implementing an action plan to cut fixed costs.

According to the plan, DPCA will now close its original assembly plant, Wuhan No. 1, and cooperate commercially with the local government to renovate the plant. The equipment and production of Plant 1 will be transferred to Plant 3 in Wuhan.

According to the company's internal documents, the DPCA factory is still selling the idle Wuhan No.2 factory. By the end of 2019, the total number of employees of DPCA will fall from 8000 to 5500 and to 4000 within three years. For operating indicators such as personnel expense rate and per capita sales volume. However, it was decided to cut the number by 1500 to 2000, which was announced verbally in November last year. The document also points out that the Dragon Factory is in negotiations with unidentified potential buyers.

Philippe de rovira, Peugeot-Citroen's global chief financial officer, also said at the semi-annual earnings meeting that the company was working to change its business model in China and that one option "may be to provide factory leases to other carmakers" to address capacity problems.

DPCA, a joint venture between Dongfeng and Peugeot-Citroen, also set a sales target of 260000 vehicles in 2019, which is only 22 per cent of the plant's capacity utilization. It is widely believed in the industry that factories usually need capacity utilization of more than 80% to remain stable, highlighting the serious overcapacity problem that DPCA faces.

Today, Shenlong I (with a production capacity of 300000 vehicles), No. 2 plant (with a capacity of 150000 vehicles), No. 3 plant (with a total capacity of 300000 vehicles), and No. 4 plant (with a total capacity of 400000 vehicles) have a total production capacity of 990000 vehicles. For the company's sales target of 260000 vehicles set in 2019, in fact one factory is enough.

In addition, frequent personnel changes have become the norm. On December 13 last year, DPCA had a major change in management. All eight senior executives stood up, of which Su Weibin, general manager of DPCA, was transferred and replaced by Li Jun, general manager of Dongfeng South Group Co., Ltd.

In terms of channels, there were originally 1000 dealers in the country, but by the end of 2018, there were less than 700 existing dealers.

The challenges facing China's auto market this year are also enormous. However, Peugeot-Citroen faces many obstacles in restructuring its business in China, especially in the face of growing uncertainties such as the market downturn, economic downturn and trade frictions. even the sale of the second plant in Wuhan and layoffs still have great challenges.

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