China Automotive Systems Inc. said Tuesday it received a development contract for a power steering system from Dongfeng Peugeot Citroen Automobiles Ltd. for its next-generation Peugeot 206 flagship vehicle.

The company said it expects to complete the development stage for the Peugeot 206 by the first quarter of 2006 and has formed a special unit to manage the project.

China Automotive also said it has been selected to supply steering systems for various other Peugeot Citroen models, including Citroen ZX and Elysee. China Automotive expects that combined annual rack and pinion steering systems for Dongfeng Peugeot will reach 100,000 units, with sales of about $7.8 million.

China Automotive Systems owns joint venture interests in four entities in China that manufacture power steering and other products for the Chinese auto industry.