RIO DE JANEIRO, Brazil - Three years after PSA/Peugeot-Citroen opens its new $600 million plant in Brazil, it hopes to have annual sales of 230,000 in the Mercosur common market in South America.
'We target 130,000 sales in 2000 in Mercosur (the common market among Argentina, Brazil, Paraguay and Uruguay) and 230,000 units within five years, after our Brazilian plant adds to the existing facilities in Argentina and Uruguay,' said Jean-Martin Folz, PSA chairman. 'It's an ambitious but reasonable target.'
PSA will spend about $1 billion to set up a plant, improve dealer networks and increase sales in Brazil over the next five years.
Folz came to Brazil to sign agreements with authorities in Brasilia and Rio de Janeiro. The plant will open in late 2000 in Porto Real, 160km west of Rio.
The agreements include a $300 million loan from BNDES, a Brazilian development bank, and a 32 percent stake for the state of Rio in Peugeot Citroen do Brazil.
The new plant is designed to make 70,000 cars with two shifts and up to 100,000 with three shifts. It will employ 2,500.
According to a PSA insider, the ramp-up plan is for 18,000 units in 2001, 30,000 in 2002 and 70,000 in 2003.
Folz said the plant will make a small Peugeot, very likely the 207 due next autumn in Europe, and a lower-medium car for Citroen. Citroen insiders said it will likely be a compact minivan derivative of the present Xsara model, which is due in Europe in 1999.
'The choice has not been decided yet,' said Bernard Terquem, Citroen International operational manager. 'Neither have we decided which car to build first, the Peugeot or the Citroen.'
Before the Porto Real plant opens, PSA will invest heavily to build two dealer networks in Brazil, especially for Peugeot. Peugeot had 60 dealers last year and wants to reach 150 in 2003. It plans to invest at least $150 million to improve its network.
Citroen's plans are more modest.
Its Brazilian importer, IVXM, now has 23 retail outlets. Citroen targets about 50 dealers in 2003, but new ones will be chosen with IVXM's agreement.