PSA signs a new operation in China. The French manufacturer announced on Monday to have taken a “significant stake” in FengChe, a specialist in “used vehicle management services in the local market”. The group will remain “minority shareholder”, PSA said the “Echoes” without revealing the amount of investment.
of the “Push to Pass” strategic plan, implemented in 2016 by the group, explains Marc Lechantre, director of the second-hand vehicles division of PSA, quoted in the press release. This plan must enable the builder to achieve its digital transformation in order to become a “service provider”.
Founded in Shanghai in 2015, FengChe offers solutions (management and sales system, B2B platforms, consulting) to emerging market players of used vehicles in China. The company, one of the pioneers of its kind in the country, aims to “improve the activities and profitability of second-hand car dealers,” the statement said.
Half-mast sales in China
PSA is banking on the second hand sector as the Chinese car market becomes more mature, with large coastal areas in the east, now well equipped with cars. Which translates into the sales of the second French manufacturer.
While China had become in 2014 the first market PSA, with nearly 740,000 vehicles delivered and allowed the manufacturer to hope to sell 1 million vehicles in 2017, PSA sales have since plummeted: the automaker has a production capacity of 1.2 million vehicles in the country, but it only sold 262,600 vehicles in China last year, a further decline of one-third compared to 2017, and a performance far removed from the historic peak of 2014.
Financing and car-sharing offers
To get out of this rut, PSA “is working on several action plans in China with its partners, and will offer a product offering that better meet the expectations of Chinese customers,” says the French manufacturer. Extending his range of services, he created in the spring of 2018 a joint venture between Dongfeng and Banque PSA Finance to offer financing solutions while car sales in China suffer from Beijing’s policy of deleveraging and restrictions on access to credit.
PSA is also trying to roll out its mobility services under the “Free2move” car-sharing brand, another fast-growing sector. In September, he created Fengbiao Carsharing Service, a joint venture with Dongfeng Electric Vehicle and Wuhan Electric Demonstration.
After sales service
PSA also invests its own in the after-sales sector: in February 2018, the group took a majority stake in Chinese auto parts distributor Jian Xin. He then joined the UAP Auto Union spare parts distributor. In both cases, the aim is to accelerate the deployment of its network of Euro Repar Car Service garages.
Finally, the second French manufacturer is seeking to reorganize its own network of dealers inefficient and very unprofitable. Some dealers even sell at a loss.