China's Chongqing Changan Automobile has confirmed it is in the process of selling its 50% stake in its loss-making joint venture with France's Peugeot SA, according to local reports.

The Chinese state-owned automaker has reportedly agreed to sell its entire stake in Changan Peugeot Automobile SA (CAPSA), which makes DS-branded passenger vehicles, to a subsidiary of Shenzen-based conglomerate Baoneng Investment Group for CNY1.63bn (US$233m).Chongqing Changan said the buyer has already made a first payment to secure the acquisition.

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The announcement followed similar news from Peugeot in early December, when the French carmaker said it also plans to sell its 50% stake in the joint venture. The interested buyer is also understood to be Baoneng Investment Group, which owns a majority stake in Shanghai-based automaker Qoros Auto Co Ltd.

The sale would bring a welcome end to Chongqing Changan's involvement in the under-performing joint venture, which was established in 2011 and operates a plant in Shenzhen with a production capacity of 200,000 vehicles and engines per year.

CAPSA has struggled to establish the DS brand in China over the last nine years, with nation-wide deliveries peaking at 23,000 units in 2014 before declining sharply in subsequent years. In 2018 the company sold a total of around 3,900 vehicles, with volumes dropping further to 2,000 units last year. CAPSA reported cumulative losses of CNY4.9bn up to the end of September 2019.

Peugeot in a previous statement said its withdrawal from the joint venture does not mean the end of the DS brand in China. The company said "the DS brand will deploy a new strategic approach to develop our business in this strategic market", adding "PSA Group remains fully committed to China". The French automaker sold a total of 262,000 vehicles in China in 2018, but volumes are estimated to have decline to around 120,000 units last year.

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