Dongfeng Says It’s ‘Far’ From Deciding on Any Peugeot Investment

Dongfeng Motor Co. (489), China’s second-largest automaker, said it’s “far” from making any decision on investing in PSA Peugeot Citroen (UG) after being contacted by investment banks.

“We indeed received information from investment banks regarding PSA and we are doing preliminary research on it,” Song Hefeng, an official at Dongfeng’s legal and securities affairs department, said by phone today. “We have not come up with any conclusion yet -- Far from reaching that point.”

Peugeot, Europe’s second-biggest carmaker, is considering selling a stake to Dongfeng to raise cash for expansion outside its home continent, though talks are at a preliminary stage, people familiar with the matter said earlier this month. The sale could lead the Peugeot family, which currently owns 25.5 percent of the shares, to lose control of the French company, the people said.

The French carmaker, which is expecting to burn through about 1.5 billion euros ($2 billion) in cash this year amid losses in Europe, will have four factories in China by the end of year. The first three, under the venture with Dongfeng, are in Wuhan, capital of the central province of Hubei. The most recent plant was inaugurated in July and will increase the company’s annual production capacity in China by two-thirds to 750,000 vehicles by the end of 2015.

A separate joint venture with Chang’An Automobile Group is scheduled to open Peugeot’s fourth Chinese factory in the southern city of Shenzhen tomorrow. Peugeot will use the plant to make upscale DS models and will start production with the DS5 wagon.

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To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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