French auto giant PSA Peugeot Citroen yesterday opened its fifth plant in China to embrace a boom in sport-utility vehicles (SUVs) as it tries to stem sharp sales falls in the world’s largest auto market.
PSA and Chinese partner Dongfeng Motor Corp (東風汽車) — the country’s second-biggest automaker and also a shareholder in the French company — unveiled the new factory in Sichuan Province’s capital, Chengdu.
The factory, to be run by the two firms’ joint venture Dongfeng Peugeot Citoren Automobile Co (DCPA), is to produce multi-purpose vehicles and sport-utility vehicles of Peugeot, Citroen and Dongfeng’s own brand, Fengshen. It is to have a capacity of 300,000 vehicles per year.
PSA — which almost went to the wall two years ago — is struggling in China, where its sales plunged nearly 20 percent in the first half of this year to about 295,000 units.
Its market share fell to 3.9 percent last year, down from 4.32 percent in 2014.
The slump is being blamed on its focus on sedans, with Chinese consumers now preferring bigger models such as SUVs.
“Our commitment to China is strong and historic and will remain so,” PSA CEO Carlos Tavares said in Chengdu.
The Chengdu plant is expected to help boost sales by expanding PSA’s offerings to cash in on the boom in SUVs. Their sales surged nearly 45 percent year-on-year in the January-to-July period, according to the latest figures from the China Association of Automobile Manufacturers.
“This is an advanced plant ... and a solid step for the development of DPCA to the western provinces of China,” Dongfeng president Zhu Yanfeng (竺延風) said.
The auto market in China’s less-developed west is not as saturated as in metropolises in the east.
The 4 billion yuan (US$600 million) factory is to employ up to 2,000 people.
PSA already has three plants with Dongfeng in Hubei Province’s Wuhan, which can produce a combined total of up to 750,000 cars per year.
It also has a factory in Shenzhen, which borders Hong Kong, with another local partner China Changan Automobile Group Co (中國長安汽車集團).
The French company aims to increase sales in China and Southeast Asia to 1 million cars by 2018.
China’s car sales increased at their slowest rate in three years last year, but growth has been rebounding in recent months as the economy showed signs of stabilization. There have also been government incentives to boost demand for cars, including a cut in purchase tax.
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