PSA Peugeot Citroen Adds a Chinese Partner

PSA Peugeot Citroën has signed a memorandum of understanding with Chinese automaker Hafei. The deal is aimed at jointly producing small multipurpose vehicles for the Chinese domestic market.

State-owned Hafei is based in Harbin, in Northern China, and currently builds a modest array of vehicles, some based on Mitsubishi platforms and technology. Unlike many of its competitors, Hafei until now has had no major joint venture with any foreign automaker.

The talks with PSA are expected to culminate in a joint venture to build compact MPVs that seat fewer than 10 passengers. The mini-MPVs will be assembled at Hafei's southern plant in Shenzhen and will compete locally with similar models from Chang'an and SAIC-GM-Wuling, among others. They will carry Peugeot, Citroën and Hafei badges and will be assembled at an initial annual rate of 100,000 units.

PSA was one of the first western automakers to enter China in the early 1980s. After its joint venture in Guangzhou failed, it established what has evolved into a long-term relationship with Dongfeng. The partners build a variety of Peugeot and Citroën models for the China market, with production last year topping 200,000 units.