BEIJING (AFP) ― Chinese carmaker Dongfeng hopes its acquisition of a $1.1 billion stake in struggling French manufacturer PSA Peugeot Citroen will bring it a technology dividend and access to Western markets, but analysts said the road is likely to be long and bumpy.
Peugeot’s board Tuesday approved an agreement for state-controlled Dongfeng Motor Corp. and the French government to each inject 800 million euros ($1.1 billion) for 14 percent stakes in the company, leaving the Peugeot family with a similar-sized shareholding.
While PSA is primarily seeking cash, Dongfeng ― China’s second-biggest automaker ― is likely to try to use the deal to improve quality while simultaneously seeking to transform itself into a global brand, analysts said.
“PSA needs desperately some help and new capital,” said Klaus Paur, London-based global head of automotive research for consultancy Ipsos, while the deal potentially offers Dongfeng entry onto a wider stage.
“The first step will be to get access to technologies, access to knowledge and experience so they can learn how to deal in the global automotive market,”
which is “precisely something Chinese manufacturers might lack at this point of time,” Paur told AFP.
Dongfeng has long-standing joint ventures with several foreign firms, including Japan’s Nissan and Honda and South Korea’s Kia, has been a partner of PSA since 1992 and recently allied with its competitor Renault. But those partnerships are focused on production in China, the world’s biggest car market.
“For Dongfeng and PSA, the approach is different, because this would propel the collaboration above the pure Chinese operations,” Paur said.
“It means Dongfeng will have access to their international strategy and to their technologies,” he added. “It’s a completely different level of things.”
