Chinese Carmaker Chang'an Automobile Group Enters Formal Joint Venture with PSA Peugeot Citroen

The Chinese carmaker Chang'an Automobile Group and PSA Peugeot Citroen, a French auto titan, have signed a formal joint venture agreement after a five-month negotiation. This marks PSA's fifth foreign partnership in China, with the to-be-built entity being its second joint venture in the country. The French automaker had undergone several twists and turns in its search for a second partner in China, including a failed joint venture with Hafei Automobile in 2007. Chang'an Automobile Group's acquisition of auto assets from Aviation Industry Corporation of China (AVIC) in 2009 enabled it to become the new negotiation target of PSA.

Key Takeaways:

Chang'an Automobile Group acquired auto assets from Aviation Industry Corporation of China (AVIC) in 2009, becoming the new negotiation target of PSA.
The joint venture between Chang'an Automobile Group and PSA Peugeot Citroen will be 50-50, with the primary focus on mass-producing small-sized vehicles based on Chang'an Automobile Group's technology platform.
PSA's acceptance of the cooperation conditions is related to its own operation plight, as the group suffered net losses of EUR 1.161 billion in 2009, more than three times more than that in the prior year.
Chang'an Automobile Group's acquisition of Hafei Automobile as the negotiator with PSA marked a significant shift in the company's strategy, enabling it to secure a new partnership with a major international automaker.
The joint venture between Chang'an Automobile Group and PSA Peugeot Citroen is expected to create a strong partnership between the two companies, with Chang'an Automobile Group's voice being bigger in the negotiations due to its government support.
The joint venture will not introduce lots of car models and technologies from PSA, but rather focus on mass producing small-sized vehicles based on the Chinese company's technology platform.

Statistics:

EUR 1.161 billion: Net losses suffered by PSA Peugeot Citroen in 2009, more than three times more than that in the prior year.
50-50: The percentage split of the joint venture between Chang'an Automobile Group and PSA Peugeot Citroen.
2007: The year in which PSA inked an agreement with Hafei Automobile to create a joint venture that eventually aborted.
2009: The year in which Chang'an Automobile Group acquired auto assets from Aviation Industry Corporation of China (AVIC).
CNY 6.13: The exchange rate between the Chinese yuan and the US dollar in May 2010.

Sources:

SinoCast Daily Business Beat (via COMTEX) - "Beijing, May 06, 2010"