PSA Peugeot Citroën will build a “core range” model designed for emerging countries at its Vigo factory in north-western Spain.

The new model is the first in a global programme and will initially be marketed in countries covering the Mediterranean Basin, the Middle East and Africa as both a Peugeot and a Citroen.

Vigo, with a workforce of 7,000, built 384,900 vehicles last year and is PSA’s leading manufacturing site. It produces the Citroën C4 Picasso, Grand C4 Picasso, Xsara Picasso, Berlingo First, New Berlingo, Peugeot Partner Origin and New Partner. Its proximity to a major port makes it an ideal base for exporting to Africa and the Mediterranean, PSA said.

CEO Philippe Varin said the introduction of the new model was part of the company’s strategy of boosting its presence in developing nations where there is growing demand for automobiles from first-time buyers.

“Vigo is just the first step in this global programme; the next stage will be Asia and then Latin America,” he told Dow Jones Newswires.

The company is looking to reduce its reliance on the European market, where it currently sells two-thirds of its vehicles.

It has identified China as a priority market. It aims to boost its market share in the fast-growing country to around 10% by 2020 from just over 3% at present.

Peugeot’s announcement comes at a time when several other large automakers in Spain have already taken measures to cut their workforces due to the global economic slowdown, adding to the country’s unemployment rate of 20%, the highest in the eurozone.

Opel, Nissan, Ford and Honda have all announced job cuts in Spain since the global financial crisis erupted at the end of 2008.

A representative in Vigo of Spain’s largest trade union, Comisiones Obreras (CCOO), which represents area autoworkers, welcomed Peugeot’s move.

“If this is the case, it is good news. It will provide stability to the plant, to the staff, to the region. We are waiting for details regarding the investment and regarding when the new model will be launched,” he told AFP.

Press reports earlier said Peugeot-Citroen opted for Vigo over Poland or Turkey because the plant offered the lowest cost base.

Spain’s auto manufacturing sector is the third largest in Europe, although it has no national automaker besides Seat, which is owned by Germany’s Volkswagen.

It accounts for 6% of the country’s gross national product and employs some 350,000 people directly or indirectly.