Peugeot Citroen and Dongfeng to work together on small car platform

This new small car platform, dubbed a "common modular platform (CMP)", will underpin the next-generation of "B and C segment vehicles under the Peugeot, Citroen, DS and Dongfeng brands". In time these new vehicles will replace the Peugeot 208 and 308, as well as the Citroen C3 and C4, amongst others.

All up the project is expected to cost 200 million euros ($280 million). PSA Peugeot Citroen will contribute 60 percent of the funding and says that it will lead development of the new platform at its facility just outside of Paris, with Dongfeng sending a team of engineers to help out.

The French and Chinese companies will also setup a research and development centre in Shanghai, which will focus on developing vehicles and technologies aimed at the Asian market.

The announcement was made on the first anniversary of Dongfeng investing in one of its car making partners. Last year, as PSA Peugeot Citroen faced a cash crunch, the French automaker launched a 3 billion euro ($4.2 billion) share issue, with both the French government and Dongfeng purchasing 800 million euros ($1.1 billion) worth of stock each.

At the time of the cash infusion, Dongfeng and the French state each owned 13 percent of PSA Peugeot Citroen. The issue of shares reduced the Peugeot family's stake in the car maker from 25.4 percent to just 14 percent.

Dongfeng also manufactures vehicles in joint venture operations with Nissan, Renault, Kia, Honda, Infiniti and Taiwanese car maker Yulon.