PSA Peugeot Citroen and Dongfeng to develop small-car platform

By Reuters

Apr 19, 2015 10:08 AM EDT

PSA Peugeot Citroen (PEUP.PA) and China's Dongfeng Motor Group (0489.HK) will spend 200 million euros ($216 million) to develop a technology platform for small cars that will help to give them more products to boost sales in southeast Asia and China.

The joint venture aims to sell 800,000 vehicles this year in China and 1.5 million vehicles by 2020, up from over 700,000 in 2014, Peugeot said on Sunday.

Ahead of the Shanghai autoshow that begins on Monday, Carlos Tavares, chairman of the French carmaker's managing board, said the joint venture's performance had been a big contributing factor to Peugeot Citroen's faster-than-expected turnaround.

The two sides plan to build a joint technology center in Shanghai dedicated to developing cars for Asian markets, Peugeot said.

"The new platform will enable PSA Peugeot Citroen and DFG to manufacture vehicles in their respective growth regions," it said, adding that using Dongfeng's supplier base would allow it to cut costs and compete regionally.

It said 60 percent of the expenditure would be committed by Peugeot, with the remaining 40 percent from Dongfeng.

Peugeot and Dongfeng's cooperation began about a year ago, when the French company announced in February last year a 3 billion euro tie-up with the Chinese carmaker.

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