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Sino-French Car Venture Aims to Triple Sales
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Sino-French car joint venture Dongfeng Peugeot Citroen aims to triple its annual sales by the end of this decade from last year, and has been encouraged by a strong performance in the first half of this year.


Liu Weidong, the venture's general manager, told China Daily yesterday that it expects to sell more than 400,000 cars a year in 2010, up from 140,000 units in 2005.


"We hope to grab 6 to 8 percent of China's car market by 2010," Liu said.


Last year, the venture's market share stood at less than 5 percent.


Both Dongfeng Motor - China's third-biggest automaker - and PSA Peugeot Citroen control a 50 percent stake of the venture, based in Wuhan, capital of Central China's Hubei Province.


From January to June this year, the venture's sales gained 38 percent to 100,173 cars from a year ago, mainly boosted by the Peugeot brand, it said in a statement.


Peugeot sales at the venture rocketed by 113 percent to 40,003 cars in the period, it said.


Meanwhile, the venture sold 60,170 Citroen vehicles, up 12 percent.


The robust growth in the first half will help the venture achieve a full-year target of selling 200,000 cars, a target that was announced at the beginning of this year.


However, Dongfeng Peugeot Citroen still trails many rivals.


Shanghai GM, a joint venture between General Motors and Shanghai Automotive Industry Corp, yesterday announced its sales surged by 49 percent year-on-year to 201,901 vehicles from January to June this year.


Chery Automobile, an independent Chinese carmaker based in East China's Anhui Province, said it sold 144,200 cars in the period, jumping 72.1 percent.


Joint ventures involving other global carmakers in China, including Volkswagen, Hyundai, Honda, Nissan and Toyota, have not yet revealed their first-half results.


But all of them outsold Dongfeng Peugeot Citroen from January to May.


Dongfeng Peugeot Citroen's Liu said the venture made a profit in the first half of this year. But he declined to provide details.


In April, he said the company aimed to reap at least 400 million yuan (US$50 million) in profits this year by boosting sales and cutting costs, after reporting consecutive losses over the past two years.


Last year, it lost 360 million yuan (US$45 million).


The venture announced earlier that it aims to cut costs by 1 billion yuan (US$120 million) this year.


Liu said yesterday that the firm was facing great pressure to slash costs as a result of rising material prices, such as oil, steel, copper and aluminium.


Thanks to strong car demand and manufacturers' aggressive cost-cutting efforts, the auto sector in China has been experiencing a faster-than-expected increase in profits since January this year.


The sector's profits expanded by 70.8 percent to 28.4 billion yuan (US$3.6 billion) in the first five months from a year earlier, according to industry statistics.


During the period, sales of domestically-made cars rose by 44 percent to 2.1 million units.


The Sino-French car venture started to build Citroen vehicles in the early 1990s and Peugeot cars in 2004.


Its current line-up includes the Citroen Fukang, Elysee, Picasso, Xsara and Triomphe, as well as Peugeot 307 and 206.


The Triomphe and 206 were launched earlier this year as part of the venture's nine new models planned from 2006 to 2009.


It will launch a new Citroen small-sized car later this year.


Dongfeng and PSA Peugeot Citroen plan to enhance manufacturing capacity at the venture's existing plant in Wuhan to 300,000 cars at the end of this year from 220,000 units now.


The two firms are also considering building a new plant for the venture to expand capacity further.


To facilitate sales growth, the venture has created an auto financing joint venture with the parent French carmaker and Bank of China one of the top four State-owned lenders to offer loans to local car buyers.


The auto financing venture will start up this month.


(China Daily July 4, 2006)


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