Changan Auto says to sign JV deal with PSA by June

Shanghai, April 26 (Gasgoo.com) Changan Automobile (Group) Co., China's third largest automaker, has confirmed its talks with France's PSA Peugeot Citroen to form a joint venture in China is in progress and the JV deal may be signed by June, media reported Friday, citing a Changan official.

Two months ago PSA Peugeot-Citroen said it was in deep talks with Changan Auto Group to set up the French car company's new Chinese venture. Earlier media reported said the venture might be based in southern Chinese city of Shenzhen, with an agreement likely to be signed in April.

On Friday at the opening 2010 Beijing auto show, Changan's vice president Du Yi told reporters that the comapny is still in talks with PSA and a deal on the 50:50 joint venture could be in place within one to two months, which would have a production facility initially in Shenzhen.

The venture would be the second in China for PSA Peugeot-Citroen, which already builds cars there with a joint venture partnership with Dongfeng Motor Group in central city of Wuhan. Dongfeng-PSA plans to increase sales by another 50% to 240,000 units this year.

The prospective Changan-PSA tie-up is expected to produce small cars and commercial vehicles under the Peugeot and Citroen brand names. PSA's previous potential partner Hafei Auto, a mini-van maker now acquired by Changan, has built a plant in Shenzhen.

The French carmaker aims to increase its China sales by 30% this year and to more than double its market share in China, the world's rapidly growing auto market, to 8% by 2020.