Dongfeng: Considering 'Rationality' of Investing in Peugeot -President

WUHAN, China--Dongfeng Motor Corp. is still considering the "rationality" of potentially investing in PSA Peugeot Citroen (UG.FR), the Chinese auto maker's president said Thursday.

Speaking on the sidelines the Global Automotive Forum in Wuhan, Dongfeng President Zhu Fushou said "it's too early to talk about" the gains from the potential acquisition of a stake in Peugeot. When asked by reporters why the company is still in talks, he said "because it's about the rationality" of a deal.

Peugeot's board is expected to meet later this month to consider a potential capital injection from Dongfeng Motor Corp., a person familiar with the matter has said, as the French auto maker looks for financing to ensure its survival amid a dwindling core European market.

At an earlier panel discussion Thursday, Mr. Zhu said moving internationally is part of "entering a new stage," but he cautioned the Chinese auto industry would face barriers.

"We will meet resistance because of trade protectionism. It won't be plain sailing," he said.

"The domestic market is key [to Chinese auto makers], and the international market offers strategic opportunities," he added. "We need to focus on both markets."

Dongfeng is the state-controlled parent of Hong Kong-listed Dongfeng Motor Group Corp.

--Rose Yu and Colum Murphy contributed to this article.

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