PSA Peugeot Citroen has tied up with Harbin Hafei Automobile Industry Group Co to form its second Chinese joint venture, part of the French car maker's plan to boost sales in emerging markets as it tries to revive its fortunes globally.

A total investment of two billion yuan (US$266 million) has been pumped into the equally-owned Shenzhen-based joint venture which will be mainly responsible for making vans, according to an e-mailed reply from Peugeot Citroen China yesterday.

"The official contract will be signed as early as the year end and the first model is expected to hit the market next year," Europe's second-largest car maker said in the statement.

The two partners signed a memorandum of understanding earlier this year in June.

The car maker has a cooperation deal with Dongfeng Motor Co Ltd, China's third-largest car maker, to produce passenger cars.

Sales totaled around 210,000 units in China last year, including the best selling Peugeot 307 and C-Triomphe sedans.

The new joint venture with Hafei is crucial to help Peugeot achieve a sales target of one million units in China by 2015 and with a five-to-six percent market share, according to Denis Duchesne, president of PSA China.

It's the first time Peugeot has drawn up an ambitious plan for the Chinese market since Duchesne took up his post in June this year.

The Paris-based car maker plans to double the production capacity of its plant in Wuhan City, central China's Hubei Province, to 400,000 by 2009, which would further expand to 600,000 by 2012.

A third plant is also envisioned with Dongfeng Motor and will be built later to meet the growing market demand in China.

The French car maker also plans to develop 12 new models in China by 2010 to widen its product lineup to attract first time buyers.

Its aggressive plan in the Chinese market follows its worldwide restructuring to improve profitability especially in emerging markets, including China, Russia and South America.

It earlier announced plans to cut costs, including slashing up to 8,000 jobs in Europe, or 12 percent of its European work force, to improve efficiency.

It also intends to cut by 50 percent the cost of guarantee claims, streamlining purchasing, reducing logistic costs and improving capacity utilization.