Shanghai (ZXZC)- Chongqing Changan Automobile Co., Ltd (Changan Automobile) said it has agreed to sell 50% stake in a joint venture with Groupe PSA to a subsidiary of Baoneng Automobile Co.,Ltd at a value of RMB1.63 billion.

The buyer, Shenzhen Qianhai Ruizhi Investment Co.,Ltd, has paid the first installment of the deal, according to Changan’s announcement. It is wholly controlled by Baoneng Automobile Co.,Ltd, the car-building unit of the Chinese property and financial services conglomerate Baoneng Group, and its actual controller is Yao Zhenhua, chairman of Baoneng Group.

（Photo source: DS)

The eight-year-old joint venture, Changan PSA Automobiles Co., Ltd. (CAPSA), has been mired in continuous loss and flagging sales. According to the statement, CAPSA posted a net loss of RMB874.09 million in 2018, while the loss reached up to RMB2.23 billion after only nine months through September, 2019.

The substantial loss should be mainly attributed to such factors as sales plunge, discontinued production of several models and the confirmation on the expected liabilities. For the first three quarters, CAPSA sold only 2,000 new cars, said Changan Automobile.

CAPSA currently possess three pieces of land covering 1.37 million square meters in total, which focus on complete vehicle development, R&D and logistics respectively.

In a bid to help CAPSA survive the dismal plight and divest non-performing assets, the Chongqing-based automaker and PSA jointly made the decision, said Changan Automobile. With powerful capital strengthen and the strong will to engage in automobile business, Baoneng Auto is willing to be the purchaser.

Founded in 2011, CAPSA was initially 50/50 owned by China Chang'an Automobile Group Co., Ltd (CCAG) and the France-based Groupe PSA. In 2015, Changan Automobile got the joint venture's 50% share from CCAG.

CAPSA works on sale and production of vehicles under the premium car brand DS. Since the start of mass production in 2013, the joint venture has so far rolled out five models, which have presence in both car and SUV fields.

Nevertheless, it seems that the French premium car brand has been marginalized due to the depressed sales performance. When the joint venture was established, both original parent companies expected its annual sales to reach 100,000 units in 2014. Unfortunately, the sales target has not been achieved yet.