France's PSA (Peugeot Citroen) Group (PEUP. PA) and its partner China Dongfeng Group (0489. HK) have agreed to cut thousands of jobs in China and will abandon two of the four joint venture car assembly plants. This is the latest effort by the two companies to curb the growth of losses at a time when the momentum of the Chinese market is weakening.
According to the plan reached last month by Carlos Tavares, chairman of PSA Group Management Committee, and Zhu Yanfeng, chairman of Dongfeng Automobile Group Co., Ltd., Shenlong Automobile Co., Ltd., a joint venture between the two companies, will halve the total number of employees to 4,000, close one factory and sell another, according to the documents. Factory.
The two companies did not comment on details of the restructuring plan. "We are working with our partners to comprehensively improve the overall performance of our business in China," said a spokesman for PSA Group.
Two sources at PSA said the agreement might prevent the company from taking action on the threat of withdrawal. They said that the CEO of PSA Group had hinted that without restructuring, the company might withdraw from its 27-year partnership with Dongfeng Automobile Group or even completely withdraw from China.
"We almost had to quit China." A source close to the PSA board said. "It's so serious."
The PSA is trying to restart in an unfavourable situation. The Chinese market was once the golden hen of the automotive industry, but it contracted for the first time since the 1990s, hit by the escalation of the trade war between the United States and China, and is expected to fall another 5% in 2019.
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