PSA to form second JV in China, possibly with Hafei

Shanghai, July 31 (Gasgoo.com) PSA Peugeot Citroen, France's largest carmaker, may form a second joint venture in China, part of its plan to boost overseas sales and take on industry leaders such as Volkswagen, Toyota and Honda, Philippe Varin, its new chief executive, told Financial Times on Wednesday.

"While Peugeot's main priority would be growing within its existing joint venture, the company is now also considering taking a second one, "Mr Varin said.

"The other carmakers in China - VW, General Motors and the Japanese - have two, and we only have one," the Peugeot chief said to the newspaper. "It's one of the options."

The French carmaker also said it had shelved plans for a third factory in China, even as Varin seeks to reduce Peugeot's dependence on Western Europe, which accounted for almost two-thirds of 2008 sales by volume.

Another popular Chinese portal Netease.com said on its website that PSA is resuming talks with Chinese carmaker Hafei and the two sides may sign a JV deal as early as this September.

PSA and Hafei signed a memorandum of understanding in June 2007 to start a feasibility study of a 50-50 joint venture for making a range of small cars at Hafei's plant in Shenzhen for the Chinese market.

The negotiations later stalled due to opposition from Dongfeng Group, PSA's only joint venture partner in China, who insisted that PSA should do a better job at Dongfeng PSA before it moves to take on another partnership.

Peugeot's Chinese deliveries fell 3.7 percent last year to 188,000 vehicles, or about 40 percent of Peugeot's local production capacity, even as the market grew 9 percent.