PSA Forms JV with China Changan Automotive

As hinted since the beginning of the week, French group PSA Peugeot Citroen announced the creation of a joint venture in China with China Changan Automotive Group. The new joint venture will be manufacturing light commercial vehicles and passenger vehicles, although the exact details of the deal have not yet been completed.

The talks between the two partners began earlier this year. Changan, China’s fourth-largest automaker, is the second joint venture operated by PSA in the biggest auto market of the world, after the one with Dongfeng Motor.

Currently, PSA is in talks for creating a third factory with Dongfeng. The new joint venture will no be a competition to the existing one, Business Week reports.

“We have a very good cooperation with Dongfeng Motors and ambitious growth plans with Dongfeng,” Jean-Marc Gales, head of the Peugeot and Citroen brands said.

The goal of the new operation is to allow PSA to increase its presence in China. The French carmaker already stated it plans grow as much as 30 percent in 2010 in China, while the country's auto sector is projected to post an increase of 15 percent.

Peugeot Citroen is currently holding a Chinese market share of 3.4 percent, according to Gales. By 2016, the group plans an increase all the way up to 8 percent. Changan on the other hand aims at a sales figure of 2.6 million vehicles by 2012.