Stalled dealership deals for new Peugeot venture

Contrary to recent media reports that French carmaker PSA Peugeot Citroen's new joint venture has failed to sign up a single dealership, the company said it already has agreements with 13 dealers in China as it builds a sales and service network for its DS Series cars.

Established with Chang'an Automobile Group in November, the nation's newest Sino-foreign automobile joint venture said in an email statement that it has considered more than 50 dealership candidates in the past three months, authorizing 13 to build outlets in nine cities including Beijing, Shanghai, Shenzhen and Chengdu.

The company plans to have 26 dealerships in 20 cities by the end of this year, it said.

Chinese-language media reports cited anonymous insiders saying that the company has yet to sign any distributors and may postpone the scheduled import of its DS series cars to China.

The reports said that dealers were unwilling to make large investments in building showrooms and doubted future prospects for sales due to poor brand recognition of the French carmaker in China.

Public relations staff at the joint venture disputed the reports, saying dealers are confident about the upcoming DS Series cars. They provided names of some signed dealers on the condition they would not be disclosed publicly.

At its founding ceremony last November, the joint venture announced that it will first import high-end Citroen DS series models to China before local production begins. First to arrive will be the DS5 and DS4 in the first half of the year, followed later by the DS3.

The French carmaker launched the DS - which stands for "different spirit" - as a premium sub-brand in 2009 and rolled out three models, the DS3, DS4 and DS5, in succession.

The Citroen DS range has been successful in Europe, selling nearly 180,000 vehicles since its launch at the end of 2010, considered "a quite good performance considering the bleak European market", according to the company's PR staff.

PSA Peugeot Citroen has another joint venture in China, with Dongfeng Motor Corp, that produces mostly compact cars. The Peugeot 508 and Citroen C5 mid-sized sedans that were added to the lineup last year marked the carmaker's efforts to tap the medium and high-end market and upgrade its brand image in the country.

Europe's second-largest automaker after Volkswagen, the company sold 404,000 vehicles in China last year, up 8 percent from 2010, but only a 3.4 percent share of the overall market.

The company said earlier this year that its goal is to have an 8 percent share by 2015.

The manufacturer reported a drop of 48 percent in net profit from global operations last year and its automotive division registered a loss of 92 million euros ($120 million), mainly due to the shrinking European auto market and rising prices of raw materials, according to its financial report released last week.