Peugeot maker PSA Group stated it is preparing to sell its 50% stake in an eight-year-old joint venture with Chinese partner Chongqing Changan Automotive which is having a hard time with falling sales.
The announcement in Paris on Thursday came after an indication from Changan in regulatory filings in November that it was looking for a buyer for its half of the Shenzhen-based venture called CAPSA, which builds cars under PSA’s premium DS brand.
PSA’s move highlights how worldwide automakers are having a hard time in China, the world’s biggest auto market, where sales contracted last year for the first time in three decades.
It also prepares to slash jobs and drop two of the four assembly plants it shares in a larger join venture with Dongfeng Group, that builds Peugeot and Citroen cars, Reuters reported in August.
A PSA representative stated the French company still hoped to present DS cars in China and a “new strategic plan” would be presented in weeks or months.
The partners prepared to continue building DS-branded vehicles at the Shenzhen plant, a China-based PSA representative stated on Friday.
PSA’s sale plan would be presented to French unions on Friday, a source knowledgeable with the matter stated.
PSA’s sales in China dropped in 2018 by 32% to 262,583 vehicles, much less than the 1 million-a-year target it had set itself a few years ago.
Changan stated it is looking for a floor price of 1.63 billion yuan ($232 million) for its stake in the joint venture.