Peugeot Maker Plans Southeast Asia Factory as Global Push Widens

  • PSA seeks local partnership in Indonesia, Thailand, Malaysia
  • Expansion part of Tavares’ post-bailout growth initiative

PSA Group, the maker of Peugeot and Citroen cars, plans to build a factory in Southeast Asia -- with a focus on Indonesia, Thailand and Malaysia -- as it widens its international reach to reduce its reliance on a challenging European home market.

Europe’s second-biggest auto producer aims to set up the plant with a local partner “to avoid beginners’ mistakes,” PSA’s Chief Executive Officer Carlos Tavares told reporters during a visit to Chengdu, China. The Paris-based company intends to start construction in 2018, a spokesman said, declining to name possible partners.

PSA is expanding internationally to catch up with rivals such as Volkswagen AG, which has been more successful at boosting profits in Asia’s growing auto markets. PSA’s push, part of a growth plan announced by Tavares in April, follows years of restructuring and a 2014 bailout by the French government and China’s Dongfeng Motor Corp.

Tavares, who’s in Chengdu to inaugurate a factory that’s focused on making sport utility and multipurpose vehicles, has said PSA will expand into Iran and India, and return to the U.S. within 10 years. The company expects to open an assembly plant in Morocco in 2019, and is in talks with Algerian authorities to add a site there, PSA’s industrial chief Yann Vincent told reporters in Chengdu. In Southeast Asia, PSA already has deals to assemble Peugeot cars in Malaysia and Vietnam.

The Chengdu factory, a joint-venture with Dongfeng, is PSA’s seventh in China, the world’s biggest car market. PSA’s cooperation with Dongfeng, which owns 14 percent of the French carmaker, has so far fallen short of expectations: sales in China dropped more than 19 percent in the first half to 297,000 units, despite a tax cut boosting overall industry demand.

PSA sells more than 60 percent of its cars in Europe.

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