While they already have presence in the Philippine roads, Chinese car brands still endure the stigma of low quality among motorists. However, in the recent turn of events in the global arena, perhaps it is time to stop underestimating the Chinese carmakers.
This week, PSA Peugeot Citroen and China’s Dongfeng have agreed a capital tie-up amounting to more than $4 billion that brings the troubled French carmaker new leadership, more time to turn its business around and an end to two centuries of family control.
Peugeot, Dongfeng Motor Group Co Ltd and the French government have signed a non-binding outline agreement, China’s second biggest carmaker. Under the memorandum of understanding, Dongfeng and the French state will each pay about $1.10 billion for a 14 percent stake in a reserved share sale and a rights issue, Dongfeng said in a statement published on the Hong Kong stock exchange website.
The rescue deal and an expected new lending partnership with Banco Santander will help Peugeot survive the expiry next year of 7 billion euros in state guarantees keeping its lending arm afloat.
Dongfeng is not the first Chinese carmaker to end up the hero. Zhejiang Geely Holding bought Sweden’s Volvo Car in 2010 and SAIC Group acquired South Korea’s SSangyong.
Peugeot has limited market penetration in Southeast Asia. Last year it sold about 6,500 cars in Malaysia, its biggest regional market, accounting for just one percent of that country’s car sales, according to research firm LMC Automotive.
Will this deal trickle down to our market and see Eurobrands, Peugeot’s distributor in the Philippines, merge with Dong Feng? There are several dealerships of the Chinese brand here already. Let’s see what happens.
