BEIJING - French
automaker PSA Peugeot Citroen plans to build a new
production plant and launch a slew of new models
in China to boost sales in the world's
third-biggest and fastest-growing auto market.
Yves Boutin, chief representative of PSA
Peugeot Citroen in China, said on Monday the group
would build a new manufacturing base with its
Chinese partner Dongfeng Motor Corporation. The
plant will be a part of PSA Peugeot Citroen's
existing joint venture with Dongfeng, based in
Wuhan, capital of Central China's Hubei province.
Boutin said details such as the exact
location, annual production capacity and
investment size of the new plant would be revealed
in
July. The French automaker would introduce nine
new models into the joint venture, Dongfeng
Peugeot Citroen, from 2006 to 2009, Boutin said.
The new plant and product plans seem to
rule out the possibility of PSA Peugeot Citroen
seeking a new Chinese partner in the near term.
Last year, the French carmaker was reportedly in
talks with Hafei Automobile Co Ltd, Mitsubishi
Motors' partner in northeast China's Heilongjiang province and
Jinhua Youngman Group, a small privately-owned
manufacturer of trucks and buses in Zhejiang province.
Boutin said that annual sales of Dongfeng
Peugeot Citroen would reach 300,000 cars in 2008.
The venture sold 140,000 cars in 2005, surging by
57.5% year-on-year. This represented a sharp
rebound from a 14% tumble in 2004.
Dongfeng Peugeot Citroen announced earlier
this year that it aimed to increase sales to more
than 200,000 cars this year. The venture now has
an annual production capacity of 220,000 cars,
expected to grow to 300,000 units at the end of
this year.
But in 2005, it reported 360
million yuan (US$44.9 million) in losses due to
heated price wars in the Chinese auto market and
high costs. Executives with the venture said that
it would regain profitability this year due to
robust sales growth and cost-cutting efforts.
Boutin said the joint venture will make
high-end cars by 2010. Currently, the joint
venture assembles the Citroen Fukang, Elysee,
Picasso, Xsara and Triomphe as well as the Peugeot
307 and 206, which are small and medium-sized
vehicles. The Triomphe and 206 were launched
earlier this year as part of PSA Peugeot Citroen's
new China product lines from 2006 to 2009.
"China's car market is
expanding steadily and we are very confident about
our new products," Boutin said. PSA Peugeot
Citroen recently set up a wholly owned affiliate
in Beijing with an
investment of 50 million yuan, which would be
mainly responsible for its imported car business
in China, he added. The subsidiary Peugeot Citroen
(China) Automobile Trade Co Ltd would also be in
charge of exporting Chinese-made spare car parts
to other countries, Boutin said.
The
French carmaker's current imported products in
China include the Citroen C5 and C4, and the
Peugeot 407, 607, 206CC and 307CC.
Last
year, PSA Peugeot Citroen's imported car sales in
China amounted to 1,300 units, Boutin said. He
also said that the group would start to provide
loans to Chinese car buyers at the end of June.
This will be through a three-party car financing
joint venture with Dongfeng Peugeot Citroen and
the Bank of China, one of the nation's four
biggest state-owned banks.
Despite recent
growth, auto industry analysts said that the
French automaker, which kicked off production in
China in 1992, now lagged behind international
rivals such as General Motors, Volkswagen, Honda
and Hyundai in the China market.
Last
year, General Motors and Volkswagen, the current
market leaders, sold 665,390 and 571,000 vehicles
in China, respectively. Total vehicle demand in
China is forecast to grow by around 15% this year
from 2005. Last year, demand rose by 14% to 5.7
million units, including 3.1 million passenger
cars.
