Chang’an and PSA Agree on China Joint Venture

Chang’an, the fourth largest Chinese automaker, and France’s PSA Peugeot Citroen signed a contract today in Paris to establish a joint venture for manufacturing and marketing passenger and light-duty commercial vehicles in China. The new company, to be based in Shenzhen, will be equally owned by the two sides.

If ratified by the Chinese government, the venture will roll out the first car, a Citroen DS, in the second half of 2012. It will utilize an existing production line and build a new one. Total capacity will reach 200,000 units a year. An engine plant and R&D center are also planned.

Beside Citroen, the Peugeot and Chang’an (Chana) brands can be employed. There is also the possiblity of launching an all-new marque.

With a registered capital of 4 billion yuan, the joint venture will receive an investment of no less than 8.4 billion yuan, or 935 million euros.

PSA current has a passenger car venture with Dongfeng. The latter has not explicitly opposed the deal, but become clearly alarmed. Analysts think Dongfeng will be a major factor in Chang’an-PSA’s future decisions regarding which models to produce.