The Porto Real plant, in the state of Rio, is scheduled to start assembling
Peugeot 206 compacts and Citroen Xsara Picasso minivan-styled cars by the end
of 2000, it said in a statement.
Peugeot is banking on a recovery by then in recession-hit Brazil, where local
producers are struggling to make their investments pay off in a shrinking
vehicle market.
Vehicle sales tumbled more than 20 percent in Brazil last year and the market
is expected to contract again this year.
Last month, rival Renault began assembling cars in Brazil, joining Fiat,
Volkswagen, Ford Motor Co and other auto makers targetting emerging markets.
This week DaimlerChrysler said it would delay the opening of a car plant in
Brazil by two months to mid-April.
Peugeot will derive some benefit from the devaluation of the real, which will
cut its building costs.
But the difficulties in Brazil have hurt its business in Argentina, where it
has a production capacity of 100,000 vehicles.
The Brazilian plant will have similar capacity.
``The construction of this production centre is part of a strategy to develop
international activities,'' the company said.
``PSA Peugeot Citroen's objective is to sell 25 percent of its vehicles
outside western Europe in the next decade, with eastern Europe and Latin
America as its main target zone,'' it said.
In the mid-1990s, the company had aimed to sell a quarter of its vehicles
outside western Europe by 2000, up from 12-13 percent at the time. Last year
it sold 360,000 vehicles, or 16 percent of total sales, outside western
Europe.
10:56 01-29-99
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