SHANGHAI, Feb 20 (Reuters) - Dongfeng Motor Corp, whose listed unit has agreed to buy a 14 percent stake in PSA Peugeot Citroen, said on Thursday it would invest 2 billion yuan ($329.14 million) to expand its technology centre to boost indigenous vehicles.
Dongfeng Motor Group Co Ltd announced on Tuesday that it and the French government would inject 800 million euros ($1.10 billion) each into the troubled French carmaker as part of a 3 billion euro plan to rescue the loss-making firm.
As part of the non-binding agreement, Dongfeng and PSA said they would increase cooperation in areas including research and distribution in other Asian markets, underlining the global ambition of China’s second biggest carmaker.
Expansion of the technology centre in Wuhan in central China, to be completed in 2016, would lay a foundation for the development of advanced engines and green vehicles, Dongfeng Motor Corp said in a statement.
Dongfeng currently has one indigenous passenger brand, Fengshen.
PSA and Dongfeng have agreed to jointly establish a R&D centre and are consider setting up a sales company to develop and sell cars in Asia. PSA already has a China joint venture with Dongfeng.
A Dongfeng source who was briefed on the company’s strategy by the top management said the promotion of its brand globally was an important factor behind the deal with PSA.
Dongfeng Peugeot Citroen Automobile Co, the joint venture, aims to triple annual sales to 1.5 million vehicles in 2020. One third of that target would be from Dongfeng’s own brand, said the source who declined to be identified because he was not allowed to speak to the media.
Dongfeng has formed joint ventures in China with PSA, Honda Motor Co Ltd, Nissan Motor Co Ltd, Renault SA and Hyundai Motor Co - the most among any Chinese carmaker - but sales of its own brand, Fengshen, make up only a fraction of its total sales.
$1 = 6.0764 Chinese yuan $1 = 0.7271 euros Reporting by Samuel Shen and Kazunori in Shanghai; Editing by Jeremy Laurence