Peugeot-Citroen and its partner Dongfeng will halve their workforce, slash production capacity as China car sales plunge

Dongfeng Peugeot Citroen Automobiles, the French carmaker’s venture with China’s third-largest automotive company, will halve their Chinese workforce to 4,000 staff by 2022, and sell two of their four factories

Sales had been dropping for three consecutive years between 2016 and 2018

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Workers on a production line at Dongfeng Peugeot Citroen Automobile in Wuhan, Hubei province on February 13, 2014. Photo: Reuters

Daniel Renin ShanghaiandZhang Shidongin Shanghai

Published: 8:00pm, 12 Aug 2019Updated: 11:09pm, 12 Aug 2019

PSA Peugeot Citroen and its Chinese partner Dongfeng Group will slash their workforce and shut two production facilities in China, scaling back their capacity after sales in the world’s largest automotive market shrank for the 13th consecutive month in July.

Dongfeng Peugeot Citroen Automobiles (DPCA), the French carmaker’s venture with China’s third-largest automotive company, will halve their Chinese workforce to 4,000 staff by 2022, and sell two of their four factories, according to two industry officials with knowledge of the plans.

The scaleback is a dramatic reversal in the industry after three decades of breakneck growth, which attracted every carmaker on the planet to pour billions of dollars into China, investments that catapulted the nation of millions of bicycles into the largest market for vehicles within a generation. China has the capacity to churn out 64 million cars a year, more than double what was actually sold last year, with the entire industry operating at an average capacity of 43 per cent.

“It will not be an isolated case in China’s struggling auto market as overcapacity becomes a thorny issue,” said Peter Chen, a Shanghai-based engineer with US car component maker TRW. “Due to declining sales, more companies will have to cut workforce and close plants to adapt to the slowing market.”

Based in the Hubei provincial capital of Wuhan, DPCA was one among the earliest foreign automotive ventures in China, establishing their partnership in 1992. The venture assembles Peugeot’s 4008 and 5008 sports-utility vehicles, and Citroen’s C5 Aircross crossover, among other models.

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