PSA Pushing Product, Dealer Network for New China JV

PARIS – China took just one year to approve PSA Peugeot Citroen’s second joint venture in the country, but PSA and its new partner China Chang’An Automobile Group have been preparing for the future with confidence.

Citroen DS5 unveiled at Shanghai auto show.

The 50/50 joint venture, approved July 12 by the National Development and Reform Commission, begins with a capital investment of RMB4 billion ($618 million). Chang’An’s half includes an existing factory in Shenzhen. The first project will be revising the existing assembly line to produce the Citroen DS5 and other large Citroen DS vehicles.

In addition, Chang’An PSA will construct a new line to build light-utility vehicles for a new JV brand. Initial capacity will be 200,000 vehicles and engines annually.

The Citroen DS5, introduced at the Shanghai show in April, will be the first product in 2013, followed by the utility vehicle about six months later.

“And then we will add other DS projects” based on the PSA large-car platform, Gregoire Olivier, PSA’s management board member stationed in Shanghai, said at the show.

“We will arrive ahead of the others,” Xu Liuping, president of Chang’An Group added. “We are proud of having better quality.”

PSA has not detailed which future DS models might be made in Shenzen, but the most likely candidate is a cross/utility vehicle. In announcing the approval of the JV, PSA said Peugeot and Chang’An models could be produced there in the future, as well.

PSA’s existing JV with Dongfeng builds a variety of Peugeot and Citroen cars, most of them based on the midsized Platform 2. Through May, Dongfeng-Peugeot Citroen Automobile in Wuhan had sold 150,750 units, a 6.6% gain in a market up 3.4%.

Citroen General Manager Frederick Banzet says his company already is lining up dealers for the DS sub-brand, as China requires each JV to have its own dealer network. Chang’An PSA dealers will launch sales next year with DS3, DS4 and DS5 models imported from Europe.

Citroen clearly is positioning its DS sub-brand as a premium marque. Banzet hosted two press conferences at the Shanghai show, one for the Dongfeng venture and one for the DS project with Chang’An. He spoke in English at the Dongfeng conference and in French for the DS5 launch.

By speaking in French, he clearly associated the DS line with France and its luxury overtones, says company spokeswoman Carolyn Langlois.