Stellantis, Dongfeng to expand exports of China-made cars with asset transfer deal
Reuters
Published Oct 19, 2023 07:23AM ET
Updated Oct 19, 2023 10:16AM ET
(Reuters) -China's Dongfeng Motor Group and Stellantis (NYSE:STLA) said on Thursday the automakers will expand their vehicle and component export business through an asset sale to capture the burgeoning China auto market better.
Under the asset transfer deal, state-owned Dongfeng will buy land use-rights and buildings in Wuhan and Xiangyang from Dongfeng Peugeot (OTC:PUGOY) Citroën Automobile (DPCA), its joint venture with Stellantis, for 1.71 billion yuan ($233.69 million).
Meanwhile, Stellantis has agreed to continue producing Peugeot and Citroen cars with Dongfeng in the China plants and exporting Peugeot 4008 and Peugeot 5008 models to ASEAN countries, and Citroen C5X model to Europe.
The move to sell the DPCA plants to Dongfeng Motor underscores Stellantis' "asset light" strategy in China, Stellantis said in a statement.
The carmaker, which sees its future as a niche player in China, closed its joint venture that makes Jeeps with Guangzhou Automobile Group (GAC) last year as sales of the brand slumped amid intensifying competition in the world's largest auto market.
It said then it was considering a similar option for Peugeot and Citroen.
The joint venture DPCA exported 37,000 cars, all internal combustion engine vehicles, in 2022 from China, accounting for nearly 30% of its total car sales in the year, according to data from China Association of Automobile Manufacturers.
DPCA said it is working on more projects to increase exports with support from both shareholders.
"After the acquisition, the company (Dongfeng) and Stellantis will further deepen their cooperation to support DPCA's continued production of its existing Peugeot and Citroen as well as Fukang models," Dongfeng said.
The acquisition will help Dongfeng consolidate its in-house new energy passenger vehicle businesses, Dongfeng said in a stock exchange filing. ($1 = 7.3173 Chinese yuan renminbi)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.