PSA Peugeot Citroen plans to build an automotive research and development center on the Chinese mainland in a bid to cater for local demand amid a car boom in the world's fastest growing major economy.

The new R&D facility will be located in Shanghai, and will cost 1 billion yuan (US$144 million), the company said in a statement posted on its Website yesterday.

PSA said the new technology center will go into operation in September this year and have more than 500 engineers by 2010.

By teaming up with PSA's global engineering center and an existing local center run by its Chinese venture, the establishment of the new technical center, part of the French car maker's CAP 2010 blueprint, aims to strengthen its engineering capability for faster expansion on the Chinese mainland.

PSA has set a mid-term sales target of 1 million units in China by 2015 with a 5 to 6 percent market share, helping it to be a mainstream and profitable market player in the world's second largest auto market.

Last year, sales of PSA's Chinese venture, Dongfeng Peugeot Citroen Automobile Co Ltd, rose 2.9 percent to 207,300 units, lagging far behind those of GM, Toyota and Volkswagen.

The car maker has said that China is one of the most important emerging markets in its bid to to improve profitability.

PSA partnered with Dongfeng Motor Co Ltd in China to make Peugeot 307, Peugoet 206 and Citroen C-Triomphe sedans.

PSA is one of a growing number of overseas car makers who are building R&D facilities in China.

General Motors announced plans last October to set up a alternative fuel research center in Shanghai, part of a US$250 million investment in its GM Park.

GM already has a Chinese technology center, Pan Asia Technical Automotive Center, which had a hand in the development of the Chevrolet Volt in conjunction with the car maker's global peers.

(Shanghai Daily April 29, 2008)