French carmaker PSA Peugeot Citroen and its Chinese partner Dongfeng Motor announced yesterday they would invest 1 billion yuan (US$120 million) in a new-phase cooperation.
Under the agreement, PSA Peugeot Citroen will contribute 630 million yuan (US$76.2 million) to the projected investment, while Dongfeng Motor -- one of China's top three automakers -- will make up the remainder.
According to Jean Martin Folz, chief executive officer of the French company, the cooperation will include increased production of their car joint venture in Wuhan -- the Dongfeng Citroen -- and the setting up of two marketing joint ventures in charge of selling Citroen and Peugeot-brand vehicles.
Miao Wei, president of Dongfeng Motor, said the plan was expected to be approved by the central government next year.
The French company wants to introduce four new models into Dongfeng Citroen by 2004 and make full use of the joint venture's annual capacity of 150,000 units to expand its business in China, Folz said yesterday during a press conference in Beijing.
However, he did not reveal the specifics of the models.
"We have set a sales target of 100,000 vehicles, including those imported by 2003," Folz said.
Dongfeng Citroen, launched in 1992 and began production in 1996, manufactured 45,000 vehicles, including the Citroen ZX Fukang -- a popular model for Chinese families and taxi companies -- and Picasso -- a newly launched saloon car -- during the first 10 months of the year, which was a 3.8 percent rise compared with the same period last year.
The joint venture, with a total investment of 13.1 billion yuan (US$1.6 billion), is 31 percent-owned by Dongfeng Motor, 26.9 percent by PSA Peugeot Citroen, 39 percent by Chinese financial institutions and 3.1 percent by French banks.
Folz said the French carmaker planned to install one of its new Peugeot platforms in the joint venture next year.
"We will redesign our new models to be brought into the joint venture according to Chinese consumers' demand," he said.
The French carmaker aims to launch 25 new models worldwide by the end of 2004, he said.
Miao said Dongfeng Citroen will use part of the new investment to set up a technical centre in the near future to primarily develop vehicles for Chinese families.
"Family car sales will enjoy their biggest growth potential in China," Miao said.
He said Dongfeng Motor will further seek cooperation with its foreign partners to enhance its competitiveness, as it faces challenges following China's entry into the World Trade Organization.
Dongfeng Motor's Fengshen Automobile Co is also producing a redesigned Bluebird model in cooperation with French-Japan carmaker Renault-Nissan.
Miao said Dongfeng Motor will focus on production of cars and heavy-duty trucks during the next five to 10 years.
(China Daily November 16, 2001)
