France's PSA Peugeot Citroen and China's Changan Automotive Group said on May 6 that 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. "The new joint venture will be complementary to the companies' existing joint ventures."
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% this year, double the growth rate for the country's entire market.
Europe's biggest automaker, Volkswagen, said last month it would increase its investment in China by 1.6 billion euros (US$2.1 billion) over the next two years, building two new production sites.
Vehicle sales in China jumped 55.8% year-on-year in March to 1.74 million units, setting a new monthly record.
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.
Copyright Agence France-Presse, 2010