PSA shares fall as car maker agrees to acquire Chinese auto parts firm

on Feb 9, 2018

PSA shares are trading in the red Friday, as the French-based car maker of Peugeot and Citroen vehicles confirmed it will buy a controlling stake in Chinese auto parts distributor, Jian Xin. No price has been disclosed with details of the agreement.

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By 1315 BST, PSA shares were 2.39% lower at €17.55. The PSA stock price remains a little higher than where it was at the beginning of 2018.

Agreement to support PSA’s Chinese after-care plans

Jian Xin is a Chinese automotive spare parts distributor, operating in the Shanghai district of the country. They source parts from European-based car manufacturers and currently sell some 5 million parts in China.

The deal will allow PSA to improve its aftercare support for Chinese customers of its vehicles. It will also allow the European-based car manufacturer to expand its own multi-brand Euro car repair garages across the country.

“Our multi-brand aftermarket strategy, one of the pillars of the Push to Pass strategic plan, aims to meet the needs of all after-sales customers around the world, regardless of their purchasing power and the make or age of their vehicle,” said Christophe Musy, Executive Vice President of After sales Services and Parts at PSA.

“China will soon be the world’s biggest aftermarket, and we have set ourselves very high ambitions there, which is why we’re already securing strong market positions,” Musy added.

PSA deal follows news of improved car sales

Peugeot owner PSA Groupe reported its latest earnings release in January, which showed global sales of its vehicles had risen some 15.4% from 2016.

And, while Peugeot is the second biggest seller of SUVs across Europe, the group also stated there were signs of recovery in the China and south east Asia market.

“Showing the first signs of a sales recovery, the Group has seen a rise in sales since July, and a market share gain of 0.3 points in second-half 2017 compared with the first half,” PSA said.