PSA Peugeot-Citroen has signed a memorandum of understanding with the Naza Group of Malaysia under which Naza will assemble and sell Peugeot's 207 model.

Naza has been cooperating with Peugeot since 2006 in the assembly of the Peugeot 206.

Under the agreement, signed in Paris Wednesday, Naza will assemble and market 18,000 Peugeot 207s - the sedan version - annually.

Production of the new model is scheduled to commence in October 2010.

PSA said that by assembling the Peugeot 207 in Malaysia it will benefit from customs agreements within the Association of South East Asian Nations (ASEAN) region.

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