China's Dongfeng Motor Group and Chrysler-parent Stellantis (NYSE:STLA) announced plans Thursday to boost their vehicle and component export operations through an asset sale, aiming to capitalize on the growing Chinese automotive sector.
In line with the asset transfer agreement, Dongfeng, a state-owned enterprise, will acquire land use-rights and buildings in Wuhan and Xiangyang from Dongfeng Peugeot Citroën Automobile (DPCA), a joint venture with Stellantis, for a total of 1.71 billion yuan ($233.69 million).
Meanwhile, Stellantis has reached an agreement to maintain the production of Peugeot and Citroen vehicles in partnership with Dongfeng at the China plants.
Additionally, it plans to export Peugeot 4008 and Peugeot 5008 models to ASEAN countries, and the Citroen C5X model to Europe.
Stellantis sees its future as a specialized player in the Chinese market.
Last year, Stellantis terminated its joint venture with Guangzhou Automobile Group (GAC) that produced Jeeps, as sales of the brand faced a decline amid fierce competition in the world's largest automotive market.
The company said it was considering a similar option for Peugeot and Citroen.
According to data from the China Association of Automobile Manufacturers, the joint venture DPCA managed to export 37,000 vehicles in 2022, making up nearly 30% of the total car sales for the joint venture during that year, all of which were internal combustion engine models.
Shares of STLA are down 3.78% in afternoon trading on Thursday.