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News of October 30, 2002

PSA Peugeot Citroën and Dong Feng Motors Reach Agreement Creating Joint Venture and Expand Cooperation in China

Paris - Jean-Martin Folz, CEO of PSA Peugeot Citroën, and Miao Wei, President of Dong Feng Motors, signed a joint venture agreement today at the National People's Congress in Beijing that has expanded the cooperation between the two groups.

This second major stage in the cooperative agreement between Citroën and Dong Feng Motors since 1992 now concerns the PSA Peugeot Citroën Group, and will allow a substantial increase in the production and sale of Citroën and Peugeot vehicles in China.

Known as Dong Feng Peugeot Citroën Automobiles (DPCA), the new company will comprise an engineering and production division and two marketing divisions for the Peugeot and Citroën brands.

The joint venture will market the cars through two separate dealer networks:

Citroën already has 470 sales and after-sales points, which market vehicles and provide customer service nationwide. Its market share rose to 7.7% as of September 30, led by the success of its model range (the Fukang hatchback and notchback, Xsara Picasso and Elysée).

Peugeot plans to create a dealer network that in 2004 will begin marketing the first Peugeot model produced in China. Based on the 307 platform, the new model will be specifically designed for the Chinese market.

The company's ambitious product plan calls for the introduction of new Citroën and Peugeot automobiles every year. In 2004, when the Wuhan plant will produce six models, the sales target is set at 150,000 vehicles. Sales will eventually rise to 300,000 units.

As concerns manufacturing, the Wuhan plant will initially be operating with PSA Peugeot Citroën's new platform 2, with another Group platform for smaller cars scheduled for introduction in the next few years.

To finance investments in this second phase of cooperation, the two partners have decided to increase the joint venture's capital by CNY 1 billion (€123 million). PSA Peugeot Citroën will contribute CNY 625 million (€77 million) and Dong Feng Motors, CNY 375 million (€46 million). Following this transaction, each partner will hold 32% of the capital alongside Chinese and French banks. Under the terms of the agreement, at the end of 2003, PSA Peugeot Citroën and Dong Feng Motors will remain the sole shareholders, each with a 50% interest.

(October 25, 2002)

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