AUTO INDUSTRY NEWS

Dongfeng and French government rescue troubled Peugeot

Dongfeng and French government rescue troubled Peugeot image

Text: / Photos: Peugeot and Dongfeng Motors | posted February 25, 2014 12:15

Chinese carmaker and the French government will each invest 800 million euros

As Peugeot struggles to raise funds for industrial, development, and commercial investment for its future products and overseas expansion. The French carmaker recently signed a rescue deal from China's Dongfeng Motors and the French government.

Under the 3-billion euro deal orginally drafted in January, Dongfeng Motors and the French government will each invest 800 million euros to Peugeot, in return for 14 percent stakes each. Existing investors in Peugeot have raised another 1.4 billion euros to be able to save the troubled company.

The new deal also sees the Peugeot family's stake diluted with a new chief executive likely to be appointed.

Cash-strapped Peugeot said their net loss was diminished to 2.32 billion euros last year, compared to a 5 billion euros in 2012. Sales also went down by 2.4 percent because of low demand for new cars in Europe.

The deal between Dongfeng Motors and Peugeot will also "strengthen overseas cooperation to achieve the objective of selling 1.5 million vehicles under the Dongfeng, Peugeot SA and Citroën brands per year starting from 2020," Dongfeng added. The Chinese carmaker is also looking to promote the Peugeot brand further in the South East Asian markets.