China's Dongfeng mulls 'rationality' of Peugeot move

Shanghai (AFP) - China's Dongfeng Motor is studying the "rationality" of coming to the aid of troubled French automaker PSA Peugeot Citroen, a top Dongfeng official said on Saturday.

Dongfeng, China's second-biggest carmaker, has been rumoured for months to be in talks with Peugeot about a potential capital injection into the struggling firm. The two companies already have a joint venture in China.

"We are discussing the rationality of the project," Dongfeng Motor Corp. General Manager Zhu Fushou told reporters on the sidelines of an industry conference in Shanghai.

Speaking at the conference earlier, Zhu touched briefly on the issue, saying Dongfeng would have to see "advantages" in any deal.

"Not only PSA but also for other targets, if we can reach a consensus that it has complementary advantages, we might do it. On the other hand, if we can't see this, we won't do it," he said.

"As a cooperative partner (of Peugeot) we are extremely concerned about its overall earnings situation," he added.

Peugeot is in the throes of a radical restructuring involving deep job cuts and the closure of a factory, and was rescued last year by means of big state guarantees for its financing and credit arm.

Earlier this month, Peugeot reported its third quarter sales fell 3.7 percent year-on-year to 12.1 billion euros ($16.7 billion).

China's auto market, the world's largest, has been the bright spot for global carmakers.

Zhu forecast that China's auto sales would rise around 12 percent this year to more than 20 million vehicles, but he expected growth to slow to no more than 10 percent annually in the future.

China's auto sales grew just 4.3 percent year-on-year to 19.31 million vehicles in 2012, industry figures showed, hit by limits on numbers imposed by some cities to ease traffic congestion and tackle pollution.

Source: http://news.yahoo.com/chinas-dongfeng-mulls-rationality-peugeot-move-074525359.html
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