PSA Peugeot Citroen has announced a joint venture in China with domestic car maker Changan Automobile Group.
A letter of intent has been signed between the two sides that will see the two firms work together to develop and manufacture both light commercial vehicles and passenger cars for the Chinese market.
PSA said the agreement with Changan would not interfere with its existing joint passenger car venture with Dongfeng Motor Group Co. The French firm is looking to cash in on China's rapidly expanding LCV market, currently dominated by General Motors and Ford, while also closing the gap to GM and the Volkswagen Group in passenger car sales.
Changan already operates a three-way tie-up with Ford and Mazda.
China overtook the US last year as the world's largest car market for new car sales and Western manufacturers were out in force at the Beijing motor show last month. Citroen also showed off its new Metropolis luxury saloon at the Shanghai Expo, which opened last week.