PARIS - PSA/Peugeot-Citroen and Toyota may cooperate on a new small car that would be jointly produced in central Europe.
PSA said it is holding preliminary talks with Toyota on a possible joint venture. According to Japanese press reports, the two carmakers are discussing the development of a small car with an engine of 800cc to 1.0 liter.
The car, to cost E6,000, would be produced on a common platform in either the Czech Republic, Hungary or Poland. Talks should be completed by the end of the year.
PSA confirmed talking with Toyota, but denied the specifics of Japanese press reports.
'Like us, Toyota wishes to grow organically, with the help of specific and lasting partnerships,' said PSA spokesman Marc Bocque. He said Toyota is one of several companies with which PSA is exploring potential ventures.
Still family controlled and fiercely independent, PSA has denied all suggestions it might merge with another carmaker. Rather, it has formed a number of partnerships on specific projects with competitors such as Ford, Fiat and Renault.
In a small car project, each company would bring its own expertise, analysts say. PSA has been an industry leader in diesels while Toyota knows how to build small cars through its subsidiary, Daihatsu. About 30 percent of all cars sold in Japan are Kei jidosha class, with 660cc engines, to qualify for tax breaks and special parking permits.
There are no similar regulation in Europe so far. But by 2008, the EU requires cutting C02 emissions by new cars to 140 grams per kilometer. And there is a growing demand by households for a second car, said Gaetan Toulemonde, an analyst with Deutsche Bank in Paris.