Dongfeng Peugeot Citroen Automobile Co Ltd, the Sino-French car joint venture, experienced a bigger-than-expected rebound in unit sales during the first half of this year.

Sales of the joint venture, in Central China's Hubei Province, surged by 54.9 per cent year-on-year to 72,500 cars from January through June, the venture said yesterday.

Sales included 53,700 Citroen vehicles and 18,800 Peugeot units, it said.

The strong growth appears much better than expected after the venture, jointly held by Dongfeng Motor Corp and PSA Peugeot Citroen, suffered a 13.8-per cent tumble in sales last year, the first decline since it started production in 1995.

The venture also reported 540 million yuan (US$65.2 million) in losses last year mainly due to that sales drop.

Encouraged by the venture's strong performance in the first half of this year, PSA Peugeot Citroen's Chief Executive Officer Jean-Martin Folz, said recently the venture is expected to sell 135,000 vehicles this year, up from its previous target of 115,000 units.

Last year, 89,000 vehicles were sold by the partnership.

Folz also said the venture will become profitable at the end of this year.

Jia Xinguang, from China Automotive Industry Consulting and Development Corp, attributed the venture's sales rebound largely to in-time upgrades of its products technologies and interior designs, which are better tailored to customers' need.

The venture now produces Citroen's Fukang, Elysee, Xsara and Picasso, and Peugeot 307, which were launched in April last year.

Folz said earlier that the venture will launch a Peugeot 206 at the end of this year and two Citroen models next year.

"With introduction of these new products, the joint venture is expected to maintain the current growth momentum next year," Jia said.

Dongfeng Peugeot Citroen is building a new 150,000-unit plant to increase its total annual production capacity to 300,000 vehicles next year.

Inventories have been slashed considerably this year thanks to robust sales, it said.

The venture said at the beginning of this year that it aimed to lower the value of its inventories to less than 2 billion yuan (US$240 million) this year to cut costs.

It produced 64,300 vehicles in the first half of this year, up 25.6 per cent from a year ago.

Executives hope to cut production costs by 2 billion yuan (US$240 million) this year over last mainly by using more domestically made components.

(China Daily July 7, 2005)