PSA Peugeot Citroen plans to invest $US500m by 2010 to double car production in the Mercosur trade bloc and could build a new factory in Argentina or Brazil, local media reported, citing the company’s Mercosur director Vincent Rambaud.

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PSA hopes to churn out 300,000 cars in the next two years to control 11% of the Mercosur market, up nearly two-fold from 160,000 units built last year when it had a 7% share. By 2015, production could reach 400,000 units, Reuters said.


To achieve this target, PSA will ramp up production at its Argentine and Brazilian factories to boost output to 170,000 units and 150,000 units respectively.


With the expansion, PSA will make at least 12 new models (including upgrades and completely new vehicles) in the region during the period, the news agency added.


A PSA spokesman confirmed the investment scheme to just-auto but would not comment further.

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PSA will endeavour to produce ‘low cost’ vehicles for sale in the Mercosur bloc, a free-trade zone that includes Brazil, Argentina, Paraguay and Uruguay. It will seek cost savings by purchasing more components from local suppliers from which it now order two-thirds of its raw materials.


The French car maker’s Argentinian and Brazilian operations will now be managed directly in the region – most likely from the Brazilian office – and not in France, according to company insiders.


PSA makes the Peugeot 307 sedan, 206, 307 hatchback, Partner and Citroen Berlingo models at its Zarate factory in Buenos Aires.


In Brazil, the group assembles the Peugeot 206 and 206 Estate/Escapade, Citroën C3 and Xsara Picasso.


Ivan Castano