Dongfeng Motor Group (0489. HK) of Hong Kong and Stellantis (STLAM.MI) of the Netherlands said on Thursday that the automakers would increase their vehicle and component export business through the sale of assets to better target the expanding Chinese car market.
By the asset transfer agreement, Dongfeng would pay 1.71 billion yuan ($233.69 million) to Dongfeng Peugeot Citroen Automobile (DPCA), its joint venture with Stellantis, to purchase land use rights and buildings in Wuhan and Xiangyang.
The largest auto market in the world, China, is on course to sell almost 25 million vehicles this year with a growth rate of approximately 3% overall, and the proportion of EVs and plug-ins is rapidly increasing.
Last month, Honda Motor Co (7267.T) said that its Chinese subsidiary would form a joint venture with Dongfeng and Guangzhou Automobile Group (601238. SS) to acquire batteries for fully electric cars. “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 stated.
Stellantis stated that it will assist the joint venture in selling the Citroen C5X model to Europe and the Peugeot 4008 and Peugeot 5008 models to ASEAN nations.
According to a filing with the stock exchange, the acquisition will benefit Dongfeng in consolidating its internal new energy passenger car operations.
Strategic alliances and collaborations are essential for success in the dynamic automotive industry. The Stellantis-Dongfeng asset transfer agreement is not simply a noteworthy event; it is also a calculated choice that will change the landscape of the Chinese automobile market. Stellantis is prepared to lead in the cutthroat Chinese automobile industry thanks to expanded manufacturing capabilities, a wider product line, and a stronger market presence.
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