Peugeot Citro?n faux pas: Still out of step?
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Troubled relationship
As well, PSA Peugeot Citro?n's dual-partner ploy will exacerbate its troubled relationship with Dongfeng, which is also a partner of Nissan and Honda.
Cooperation between PSA Peugeot Citro?n, one of the first foreign carmakers in China, and Dongfeng can be traced back to 1992 when Citro?n set up a joint venture with the Chinese group.
In 2004, Peugeot joined the joint venture after it bitterly pulled out of its failed project with Guangzhou Automobile Group in 1997 due to huge losses and poor sales of its outdated models.
The partnership with Dongfeng too suffered due to the French group's lackluster choice of products, insufficient localization and poor branding efforts.
Last year, PSA Peugeot Citro?n sold only 272,000 cars in China, less than one-fifth of Volkswagen's deliveries in the country.
Worse is its failure to reflect on its own problems, instead laying the blame on Dongfeng.
"The joint venture with Dongfeng is not successful and we are also unsatisfied with a mere 3.5 percent market share in China," PSA Peugeot Citro?n's China CEO Claude Vajsman told the media on May 6.
Vajsman announced that the French carmaker aims to sell 2 million vehicles a year and grab 10 percent of the auto market in China by 2020.
Vajsman also boasted that the French carmaker has not put its "specialty" in the light commercial vehicle sector into practice in China.
Yet it will make light commercial vehicles in China with Chang'an rather than its established partner Dongfeng.
Dongfeng must be a decent partner, or at least not a bad one, as it is getting on well with Nissan and Honda.
Its joint venture with Nissan moved 600,000 passenger cars last year, more than double the sales of its tie-up with PSA Peugeot Citro?n.
The light commercial vehicle segment, only a small share of the market in China and elsewhere, will do almost nothing to help PSA Peugeot Citro?n achieve its high-flying sales goals.
Attempting to placate Dongfeng, which is angry at PSA Peugeot Citro?n's association with Chang'an, the French carmaker unilaterally announced that it intends to build a third plant for its joint venture with Dongfeng.
