Peugeot and China's Changan sign joint venture deal
France's PSA Peugeot Citroen and China's Changan Automotive Group said Thursday they had signed an initial agreement to set up a joint venture to produce vehicles in the world's top auto market.
Peugeot and Changan have signed a letter of intent for the 50-50 venture to make light commercial vehicles and passenger cars, the companies said in a joint statement.
"This joint entity will produce light utility vehicles and passenger vehicles that will conform to the best environmental standards," the companies said.
"The new joint venture will be complementary to the companies' existing joint ventures."
The automakers are still discussing details of the project, according to the statement.
Peugeot already has a joint venture with China's Dongfeng Motor Group but intends to further increase its presence in the country.
It announced in January that it aimed to increase sales in China by 30 percent this year, double the growth rate for the country's entire market.
China has been a boon for foreign automakers as sales in developed countries slumped during the financial crisis.
The nation's auto sales hit 13.64 million units in 2009, overtaking the United States as the world's number one auto market as Beijing offered incentives such as lower purchase taxes and subsidies for fuel-efficient vehicles in rural areas to boost the sector.
Vehicle sales in China jumped 55.8 percent year-on-year in March to 1.74 million units, setting a new monthly record.
Europe's biggest automaker, Volkswagen, said last month it would increase its investment in China by 1.6 billion euros (2.1 billion dollars) over the next two years, building two new production sites.
© 2010 AFP