Peugeot Citroen plans to outsource to China

French carmaker PSA Peugeot Citroen plans to boost its sourcing of spare parts from China by the end of this decade, according to its local car joint venture.

The venture with Dongfeng Motor Corp, the nation's No 3 auto group, said yesterday that PSA Peugeot Citroen plans to procure 600 million euros of spare parts from China a year by 2010 for its production in Europe and South America.

The tie-up, based in the central city of Wuhan, said the French carmaker bought a total 350 million euros in spare parts from China during the 2004-07 period, without providing a figure for last year.

"Its China sourcing will be on a fast track in the coming years ... this is a big opportunity for our suppliers," the venture said.

The venture now has 326 suppliers in China.

PSA Peugeot Citroen set up a procurement center in 2004 in Shanghai. The venture said the center will double its staff to 100 by 2010.

A spate of other global automakers, such as Volkswagen, Ford and General Motors, are also increasing procurement from China, taking advantage of low costs and the improving quality of the spare parts industry here.

Meanwhile, the Sino-French venture said it plans to build a third car plant. But it wouldn't reveal the size of the investment, production capacity, location or a time frame for its opening.

The company has a 300,000-unit plant in Wuhan that makes Peugeot and Citroen small and medium-sized models. Its second factory, also in Wuhan, will be operational next year with an annual capacity of 150,000 larger sedans.

The venture said it plans to launch 20 all-new models before 2013, with five this year to woo Chinese buyers.

It expects to increase sales by 30 percent this year from 207,255 cars in 2007, the venture said.

PSA Peugeot Citroen last June signed a memorandum of understanding with China's main minibus producer Hafei Automobile Co to produce high-end vans. Hafei, based in Northeast China, is reportedly in merger talks with Dongfeng.

Sales of China-made vehicles rose by 19.27 percent year-on-year to 1.52 million units in the first two months of this year, according to data from the China Association of Automobile Manufacturers.

Full-year sales are predicted to hit 10 million vehicles, up from 8.79 million units in 2007.