PSA to Procure Chinese Automotive Parts in Bulk
Not long ago, DongFeng Motor Corp and PSA officially signed a global strategic alliance agreement, and they are planning a series of business cooperation. PSA, based in Europe, will procure Chinese components for car production in bulk.
Increasing purchase and application of Chinese components will help PSA decrease costs effectively. According to PSA's procuring plan, PSA will spend EUR 600 million on Chinese components, and cooperate with Dongfeng Peugeot Citroen Automobile Company Ltd. to assist suppliers of China, Taiwan and Korea to build connections and supply PSA's plants in Europe and South America.
PSA is not the only case that procures Chinese components to reduce cost, but such cases are few. Audi included Chinese low cost and reliable parts into its procuring system. Mercedes-Benz and BMW once procured Chinese parts in bulk to reduce expense and investment. It's clear that the German top 3 car makers have procured from China to reduce cost.
The current European car market is still in a slump due to the debt crisis, this status still applies to the European car market. PSA has recently reduced its capacity in Europe. Former PSA CEO said the group would raise market share, conduct layoff in Europe, and shut down plants to offset the slump. PSA hopes to strengthen the investment in overseas market to gain profits in 2014.
