Peugeot and China Changan Automotive in joint venture

Peugeot production line
Image caption Peugeot is looking to expand in the huge Chinese car market

French car giant Peugeot has agreed a new joint venture to manufacture light commercial vehicles and cars in China.

Peugeot has signed an initial agreement with domestic car maker China Changan Automotive Group, though financial details are still being discussed.

If it goes ahead, the deal will give Peugeot a bigger foothold in the fast-growing Chinese car market - now the biggest in the world.

It will add to Peugeot's existing venture with Dongfeng Motor Group.

That deal, dating back to the early 90s, produces variations of Peugeot and Citroen cars for the Chinese market.

Last year, its production made up 3.5% of the Chinese market.

The new venture is expected to focus on light commercial vehicle production - a market where US rivals General Motors and Ford already have a foothold.

China is seen as an increasingly important market for global car makers who have suffered massive declines in demand in more developed global markets.

China Changan Automotive is currently the fourth-largest car maker in China.

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