They were presented to shareholders with two short videos in Chinese subtitled in French. Liu Weidong and An Tiecheng, Dongfeng’s new representatives on PSA’s supervisory board, apologized on Tuesdaygeneral meeting of the manufacturer. The Peugeot and bpifrance clan, the other reference shareholders, had come in strong support Carlos Tavares and Louis Gallois, the tandem driven back to the wheel of the group . To tell the truth, nobody seems to be offended. “At the moment, we speak more about Opel Germans than Dongfeng Chinese,” laughs a trade unionist.
Four years after his arrival in the capital, Dongfeng turns out to be a discreet partner. With the game of double voting rights, it is the Chinese group – founded half a century ago by Mao Zedong himself – the most influential shareholder: he possessed at the end of December nearly 20% of the voting rights against 17.5% for Peugeot and 10% for bpifrance. The three partners hold the same percentage of the capital, 12.23%, and none can increase their participation without the agreement of the other two.
Reserve does not mean no influence. “It’s not always a party with Dongfeng,” says a familiar of the higher spheres of PSA, which still reminds that their arrival was “more than welcome” at the time. Coming to the rescue of a Peugeot home on the brink of collapse in 2014, Dongfeng (which has since almost tripled its stake of 800 million) was looking to make a technological leap. In return, the dragon was to help the lion reassure the markets and develop in China and Southeast Asia.
Chinese broth
“This plan did not succeed. The game of Dongfeng is not easy to understand and we can ask the question of their contribution beyond the cash, “says a player in the sector. In fact, in South East Asia, PSA alone has been an ally in Vietnam (Thaco) and Malaysia (Nasa). As for China … In 2014, PSA was selling more than 700,000 vehicles. In 2017, it was half the time. The Chinese subsidiary DPCA, half owned by Dongfeng, even fell into the red last year, with 30 million euros of operating losses.
If the regional headquarters of PSA was moved from Shanghai to Wuhan, the den of Dongfeng, the latter “did not wet the shirt to boost sales,” laments an internal source at PSA. “The wrongs are shared”, tempers one to the direction of the group, where one assumes not to have been able to propose the right models. In front of its shareholders, Carlos Tavares said Tuesday to be “ahead” on its strategic plan, “except in China.” There, he said, “there is still much to be done, especially in the organization.”
A euphemism. For a year and a half, the country has had three bosses : Grégoire Olivier, Denis Martin, then Carlos Gomes for a few weeks. At the beginning of March, Carlos Tavares recognized that the group had taken too much time to explain to his partner that “the Chinese market had changed”, and that it was necessary to tighten the screw.
In two years, the fixed costs of DPCA only dropped by 10% … while those of Capsa, the other Chinese “JV”, were reduced by 23%. Changan, the co-owner of Capsa, will even produce some of its cars in the Shenzen factory to limit the breakage. Something that was not done by Dongfeng at DPCA. Moreover, if PSA envisaged reducing the production capacity of DPCA – about a million vehicles! – Dongfeng did not seem to hear it that way, paying attention to the consequences on the job. PSA now claims to want to maintain this latent overcapacity.
Electric diktat
By cons, the partnership on the electric car works better. The group’s future zero-emission platform is co-financed by Dongfeng up to 50 million euros who will share the intellectual property. The project is piloted from China. “But you have to get up early to implement non-Chinese components, a fortiori Japanese, in the electrical production chain. At first, it was niet, even if the value for money was better, “says a French engineer.
At Vélizy, PSA’s R & D center, we sometimes meet Chinese engineers. An exchange program was initiated two years ago between France and Wuhan. It is perhaps he who allowed the birth of the first Peugeot pick-up Dongfeng base. One of the very few successful collaborations between PSA and its Chinese shareholder.