Dongfeng and PSA extend their joint venture

Dongfeng Nissan Viwa

China’s Dongfeng Motor and Peugeot maker PSA are extending their business cooperation, regarding the Chinese company decreasing its stake in PSA to help smooth the French automaker’s merger with Fiat Chrysler Automobiles (FCA).

Dongfeng stated on Thursday it had agreed with PSA to increase the duration of their joint venture Dongfeng Peugeot Citroen Automobiles (DPCA).

According to the deal, the venture could get the rights to PSA’s new brands in China and will take advantage of new technologies and intellectual properties, the Chinese company stated.

PSA was not immediately available for comment.

The announcement comes a day after the companies stated Dongfeng would decrease its 12.2% stake in PSA by selling 30.7 million shares to the French company.

Analysts stated the move could smooth U.S. regulatory authorization for PSA’s roughly $50 billion merger with Italian-American automaker FCA.

The sale of Dongfeng’s shares in PSA, worth about 680 million euros ($757 million), will leave the Chinese group holding about 4.5% of the merged PSA-FCA, which is about to become the fourth-biggest automaker in the world by sales volumes.

“As the cooperation between Dongfeng and PSA deepens, we expect the joint venture to keep making good progress in China,” stated a Dongfeng representative.

On a conference call, Dongfeng stated DPCA would have exclusive rights to PSA’s Opel cars should the partners agree to bring the brand to China, and enjoy decreased costs on auto parts imported from PSA.

Previously this year, a document observed by Reuters showed Dongfeng and PSA plan to slash jobs at Wuhan-based DPCA and decrease its number of auto plants to try to make the venture more profitable.

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