Financial Times (Geneva) - PSA Peugeot Citroën is considering building low-cost cars in China for that market and for export, its chief executive said.
Philippe Varin said that while the company had made no firm decision to enter the segment, if it did it would build the cars in Shenzhen at a planned plant with its new joint venture Chang'an, which are developing a new "Chinese" car brand.
Speaking at the Geneva auto show, Mr Varin said: "We are considering our options in the low-cost segment."
"One of the options is that we use the local brand in China to do this."
PSA, like other western carmakers in China, is bowing to government wishes to develop a local brand, which will begin producing cars in 2013.
The Shenzhen plant, with capacity to produce 200,000 cars a year, will begin production from 2012.
"Our main focus is China, but nothing prevents us from exporting", Mr Varin said. He said that the project was still under review, and that the company had not made a decision.
While its French rival Renault has used its no-frills Logan brand as a beachhead for emerging markets such as India, PSA has until now shunned low-cost cars.
Christian Streiff, Mr Varin's predecessor as CEO, ruled out building them.
In Europe, PSA is pushing its brand image up market. While it does not compete directly with Germany's premium carmakers Mercedes-Benz, BMW and Audi, it is seeking to raise the prices and residual values its cars command with new models such as Peugeot’s RCZ roadster and Citroën’s DS line, whose cars it describes as "distinctive" if not luxury.
Mr Varin said that any move into low-cost cars would not be at the expense of this strategy. "One thing is sure: you can't ask a dealer to sell a Peugeot 508 and a low-cost car at the same time."
In China, PSA is aiming at both affluent and mass-market customers.
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The company's joint venture in China with Chang'an – its second – will produce a midsized or "C" segment entry-level Peugeot car based on those built at its plant in Vigo, Spain for the Middle East and in north Africa.
However, in Geneva the French group on Tuesday also unveiled the Metropolis, a long limousine aimed at demonstrating Citroen's ambitions to expand its DS line with a car designed for China. "We think that this distinctive line in China has significant potential."
Mr Varin would not be drawn as to whether his company aimed to compete directly with the German producers, who are making hefty profits on big limousines developed expressly for China, where demand for expensive chauffeur-driven cars is brisk. He said: "We will try to give some flavour of the French design."
PSA, like Renault and other mass-market carmakers, is expanding aggressively in emerging countries to reduce its reliance on Europe's stagnant car market. In February the company said that it planned to enter the Indian market.
In China, the French group's older joint venture with Dongfeng, which will break ground on its third plant in Wuhan soon, contributed €159m ($219.8m) or about 14 per cent of net income last year.
