Peugeot-Citroen in $1.2B joint venture in China

[July 09, 2010]  PARIS (AP) -- France's PSA Peugeot Citroen SA signed a deal Friday to set up a euro935 million ($1.2 billion) joint venture to make small, low-emission cars in China with China Changan Automobile Group.

The 50-50 joint venture will aim to produce 200,000 vehicles and motors a year at a facility in Shenzhen, starting in the second half of 2012, according to a statement from Peugeot Citroen.

The French carmaker is looking outside Europe for growth. State-owned Changan is one of China's biggest automakers.

The venture would produce a line of Citroen DS cars and develop a new line of cars and light trucks. The deal foresees initial investment of 8.4 billion renminbi or euro935 million, the statement said.

Strong demand for new cars in China helped Peugeot-Citroen report a record number of unit sales in the first half of the year. The maker of the popular Peugeot 207 and Citroen C4 Picasso said Wednesday that sales of cars and light trucks rose 17 percent to 1.86 million units in the first six months of the year.

Its sales in China gained 49 percent in the first half to 176,000 units.

China's parliament leader Wu Bangguo, visiting France, took part in the signing ceremony in Paris. He is to meet President Nicolas Sarkozy later Friday.

[Associated Press]

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