PSA could bring Peugeot and Citroen models to Europe from a new export-only Chinese plant currently under discussion, writes Mark Bursa.

The plant is part of discussions between PSA and Chinese automaker Hafei Motor with a view to setting up a second China JV for the French company.

This involves PSA becoming involved with Hafei at its plant in Shenzhen, on China's south-east coast. PSA president Christian Streiff said a decision on whether to go ahead with the deal would be made "within the next six months", and the plant would be up and running by around 2011.

The venture seems to involve two elements - a plant building cars and light commercials for the local market and an export-only facility, which would either be wholly owned by PSA or with a "significant majority share" held by PSA, said Streiff.

Hafei Motor is based in Harbin, north-east China, but also has an existing second plant in Shenzhen, making the Seibao subcompact sedan. "We are not interested in Harbin, only Shenzhen," said Streiff.

So far only Honda has successfully set up an export-only plant in China, exporting the Fit/Jazz model to markets including Germany. Under Chinese rules, foreign automakers can own 100% of plants whose output is purely intended for export.

Models under consideration for the JV include low-cost light commercials of types not currently made by PSA, as well as existing LCV models. As most of PSA's range is jointly developed with Fiat, the venture could also assemble vans for the Italian company.

However Streiff also said the export-only plant could build "high value passenger cars" for sale in European markets. PSA is starting to leverage emerging markets as a source of supply - its Argentina plant has this year started shipping the sedan version of the Citroen C4, the C4 Pallas, to markets including Turkey, Hungary and Spain.
The C4 Pallas is also built in China, at Dongfeng Peugeot Citroen Automobiles (DPCA), PSA's existing China JV with Dongfeng Motor. But executives at the Argentina plant said the Chinese-built cars were of significantly lower quality than the ones built in Argentina.

'Coolbear'