Catering to U.S. regulators, PSA or cease cooperation with Huawei


In November 2019, Peugeot Citroen Group (hereinafter referred to as “PSA”) announced its merger with Fiat Chrysler Group (hereinafter referred to as “FCA”) to form the world’s fourth largest automotive group. In order to obtain US regulatory approval for the merger of the two parties, PSA’s partner in China, Dongfeng Co., reduced its stake in the company by approximately 679 million euros. According to Reuters, the current PSA-Huawei partnership may be a new obstacle to the US regulator’s approval of the merger of the two major car companies. To this end, Carlos Tavares, CEO of PSA Group, said recently, PSA is willing to follow the instructions to adjust its business relationship with Huawei.

Before PSA reexamined its partnership with Chinese partner Huawei, the company was already in trouble in the Chinese market. According to official data, in 2019, PSA sold a total of 117,084 vehicles in China and Southeast Asia, a year-on-year decrease of 55.4%, of which Peugeot brand sales were 63559 units, a 55.7% year-on-year decrease; Citroen brand sales were 51167 units, a year-on-year decrease of 55.3 %. In addition, due to annual losses, PSA also “parted ways” with Chinese partner Changan Automobile and each sold 50% of the joint venture company Changan Peugeot Citroen.

In order to return to the mainstream in the Chinese market, PSA ’s joint venture in China, Shenlong (Dongfeng Peugeot Citroen Automobile), announced the “Yuan” plan at the 2019 Chengdu Auto Show. The plan is divided into three phases. The first phase is focus on reducing costs, reducing the company’s breakeven point to less than 180,000 vehicles, and strive to achieve a positive cash flow from negative to positive; the second stage is from 2020-2021, Shenlong will achieve stable profitability, and annual sales will increase to the level of 250,000 units, the break-even point will be reduced to 150,000 units. The third stage is from 2022-2025. By then, the annual sales of Shenlong will be stable at the level of 400,000 units.

In fact, in order to achieve the “reversal” in the Chinese market, in addition to the efforts on the system, intelligent, networked is also an excellent opportunity. As early as 2017, PSA cooperated with Huawei, which helped PSA build a Connected Vehicle Modular Platform (hereinafter referred to as “CVMP platform”), which supports billion-level car networking and provides Industry interconnection capabilities support the integrated development of connected car business and smart cities. Vehicle applications include functions such as vehicle abnormal movement alarm, car theft tracking, natural language-based speech recognition, online music, and other functions, and gradually extended to automobile remote diagnosis, OTA wireless Software updates and other areas.

If PSA ceases to cooperate with Huawei, the speed of the strategic advancement of PSA in the field of intelligent networking will inevitably be affected. However, since Carlos Tavares has made a statement of “willing to adjust the cooperative relationship with Huawei”, it seems that the above impact is not as significant as that of the US regulatory authorities.