Dongfeng Peugeot Citroën Automobile (DPCA) – an equal-stake joint-venture (JV) between China's Dongfeng and French automaker PSA Peugeot-Citroën – plans to establish a vehicle assembly plant in Vietnam, says Reuters, citing reports in the Chinese media. DPCA is likely to set up the plant this year through a partnership with Truong Hai Auto Corporation (THACO). Separately, a Bloomberg report says that PSA Peugeot-Citroën is considering investing in setting up a car manufacturing plant in Morocco. Citing two unnamed sources, the report adds that PSA may make an announcement on the matter in June. The plant is expected to have an annual capacity of less than 100,000 units per year.
Significance: Although unconfirmed, both reports point to the new future direction for PSA Peugeot-Citroën following the capital tie-up with Dongfeng last year. As part of the agreement, Dongfeng invested EUR3 billion (USD) in the French automaker for a 13% equity shareholding. Investment in both locations would be positive for the automaker, providing it with access to fast-growing markets in Southeast Asia and Africa. Although Vietnam is a fairly small market with light-vehicle sales of 127,543 units last year, a manufacturing presence in the country would allow the automaker to export vehicles to other big markets in the region, including Indonesia and Thailand, without incurring high import taxes. Similarly, a manufacturing base in Morocco would help the automaker penetrate the vast and underdeveloped African markets. The French automaker signed an agreement last year with Nigerian manufacturer PAN Nigeria Ltd to assemble its 301 sedan at the latter's Kaduna plant, with the prospect of local assembly of the Peugeot 508 and Peugeot 308 in future too.
