Fourth Factory unit in the Pipeline for Peugeot-Dongfeng

Published By : 03 Jul 2014 | Published By : QYRESEARCH

Responding to increasing demands in the Chinese market, Europe’s second-largest carmaker PSA Peugeot Citroen (UG) is in talks of setting up another factory in the country together with local carmakers Dongfeng Motor Corp.( 489) making it the fourth vehicle plant in China. The unit, to be built in Chengdu of Sichuan province, will have the capacity to manufacture around 300,000 sport-utility and multipurpose vehicles. This move is likely to raise the joint capacity of both car manufacturers to at least 1 million units per year. Production is set to begin in 2016.

The other three factories of the Dongfeng-Peugeot venture are based in Wuhan in Hubei province. The first two plants had a combined capacity of 450,000 vehicles annually. The third unit, built in 2011, focused on energy-saving vehicles at the same speed as Peugeot’s plants in Europe. The struggling French carmaker had signed a rescue deal with the China manufacturer earlier this year, with Dongfeng buying 14% stake in Peugeot. Sales of Peugeot Citroen rose 26% last year, jumping to 557,000 units. It also helped Dongfeng gain international competitiveness, build a global brand and enable exports.

Auto sales in China rose 11% in the first five months of 2014, with Dongfeng-Peugeot contributing nearly 18% deliveries. The manufacturers intend of selling 1.5 million cars annually in China by 2020.

Dongfeng Motor has other tie-ups with Honda, Renault, Hyundai and Nissan, while Peugeot has another factory unit set up in China in a joint-venture with Chang’An Automobile Group.
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