PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, will build a fourth vehicle plant in China with local partner Dongfeng Motor Corp. (489) to respond to soaring demand in the country.
The factory in Chengdu in Sichuan province will be able to make 300,000 sport-utility and multipurpose vehicles a year, with production starting “in late 2016,” the Paris-based company said yesterday in a statement. The plant will boost the manufacturers’ joint capacity to 1 million autos annually.
China’s auto sales rose 11 percent in the first five months of this year, with deliveries by the Dongfeng-Peugeot venture surging 18 percent. Wuhan-based Dongfeng bought a 14 percent stake in Peugeot in May to help fund the French company’s turnaround efforts, which hinge on expanding in growing economies such as China, the world’s biggest car market.
Dongfeng and Peugeot have a target of selling 1.5 million vehicles annually in China by 2020. Peugeot’s sales in the country last year jumped 26 percent to 557,000 vehicles, and the partnership reiterated plans yesterday to raise deliveries to more than 650,000 this year.
Advanced Research Japan predicted in April that the Chinese auto market will rise 36 percent from 2013 figures to 30 million vehicles in 2020. Carmakers from abroad that are adding production in the country include Volkswagen AG, Ford Motor Co. (F:US) and Fiat SpA (F)’s Chrysler division. Dongfeng is also setting up an SUV factory with Peugeot’s French competitor, Renault SA, that’s scheduled to begin production in 2016.
Dongfeng and Peugeot opened their third joint assembly plant a year ago in Wuhan to produce four models. Peugeot also has a factory in the country in a tie-up with Chang’An Automobile Group that makes the French company’s upscale DS models.
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