SHANGHAI: China's car market will continue to grow by about 10 percent a year for several years, the chief executive of PSA Peugeot Citroen said as the French car maker prepared to unveil its new DS5 in Shanghai.
In a move that illustrates the importance of China, now the world's largest auto market, Citroen was due to take the wraps off its new DS5 premium five-seater car in a Shanghai ceremony on Monday, just ahead of the official opening of the Shanghai auto show.
"Ten percent growth will last for several years," Varin told journalists ahead of the show. At the beginning of the year PSA said it expected the Chinese market to maintain double-digit growth in 2011.
Gregoire Olivier, chief executive of PSA's Asia operations, said that about 5 percent of Chinese people own a car compared with about 55 percent of Europeans, a disparity he said showed how much there is for the Chinese market to grow.
Car ownership is not evenly spread in the country, with Beijing and Shanghai having to impose limits on car registrations even as smaller towns and cities with lower car ownership numbers emerge and carmakers rush in to scoop up sales.
"Smaller towns are getting into the market and carmakers are starting to be able to set up there," said Varin.
PSA will produce DS5s, the latest model in its DS range, in China with its new partner Changan Automobile, China's No.4 automaker.
PSA plans to set up a dedicated network of DS dealerships in China to underscore the exclusivity of the range, which revives the name of the iconic Citroen DS of the 1950s-1970s, as the company seeks to tap into the growing premium market in China.
About 60 percent of the DS5's sales should come from Europe and the rest from China, Olivier said.
As required by Chinese legislation, PSA and Changan will also launch a dedicated brand as part of their joint venture, starting with commercial vehicles and passenger vehicles to follow two to three years later.
Olivier said the new brand could be launched within a year.
"China is objective No.1 for the brand, but we can't rule out exporting it," he added.
PSA and Changan, the state parent of Chongqing Changan Automobile Co, signed a deal for a 50-50 manufacturing joint venture in July 2010, saying at the time the venture would have an initial investment of 8.4 billion yuan.
The partners are waiting for the final approval from the Chinese government, but today "everything suggests that the joint venture approval is following its normal course," Varin said.
PSA aims to increase its China market share to 8 percent between 2015 and 2020, compared with 3.3 percent in 2010. In Europe, its 2010 market share reached 14.2 percent.
China is already its second-biggest market after France.
It sold 375,600 vehicles in China last year, compared with 832,000 in France.
PSA already has a long-standing joint venture in place with China's No.3 carmaker, Dongfeng Motor, with which it makes Peugeot 408 and Citroen C5 sedans. It is trailing General Motors and Volkswagen, which are performing strongly in China.
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