Azernews.Az

By Bloomberg

PSA Peugeot Citroen, which is striving to reduce reliance on Europe by boosting car sales in emerging markets, plans its first direct investment in Africa with an assembly plant in Morocco.

The new factory will be located near the city of Kenitra, 47 kilometers (30 miles) north of the capital, Rabat, under an agreement to be signed Friday, Jean-Pierre Mercier, leader of France’s CGT labor union, said by phone. The plant will start with capacity to build 90,000 vehicles a year and possible eventual expansion to 200,000 autos.

The Kenitra project is Paris-based Peugeot’s first manufacturing investment under the watch of Chief Executive Officer Carlos Tavares’s watch and confirms his intentions to leverage the benefits of a reorganization last year that included a stake sale to Chinese manufacturer Dongfeng Motor Corp. and the disposal of the French company’s auto-loan unit.

Tavares, who left Renault SA to become CEO of Peugeot more than a year ago, is following the strategy of his former boss, Carlos Ghosn, who pushed the French competitor into markets abroad. Renault already has plants in Morocco, in the cities of Tangier and Casablanca, as well as in Algeria.

The Moroccan plant will also be Peugeot’s first wholly owned plant in Africa, where Jean-Christophe Quemard, one of the four members of the company’s management board, runs operations. Peugeot, Europe’s second-largest carmaker signed an agreement last year for PAN Nigeria Ltd. to assemble the 301 under contract in Kaduna, with a possible addition of the larger 508 sedan and the 308 hatchback.

Peugeot’s sales in Africa and the Middle East dropped 25 percent last year to 169,400 vehicles and accounted for 5.8 percent of its worldwide deliveries. In the first five months of 2015, Peugeot’s new registrations in that market jumped 18 percent from a year earlier to 76,900 autos.