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Peugeot 508 goes into production in April

PARIS – Peugeot’s two-continent strategy goes from theory to practice in April, when the Peugeot 508 goes into production at Dongfeng-Peugeot-Citroën Automobile Co. Ltd. in Wuhan.

Peugeot will begin selling its flagship car in February in France, and in July in China, an unprecedented commitment that has its basis in cold economic facts.

Although investing in a second set of tools in China adds to the underlying cost of the 508 program, the fact that China could add an additional 65,000 units a year to global volume means that development costs are spread out over more vehicles. The result is a more competitive car in the global D-segment. In France, the bestselling version is expected to cost about €25,000 ($33,500).

The market share of upper-medium sedans in Europe like the VW Passat is only half as big as it was a decade ago, although sales were still 1.4 million units in 2010. But in China, the D-segment in 2010 was 2.3 million units, said marketing and communication director Xavier Peugeot, a member of the controlling family at PSA Peugeot Citroën. Globally, the segment is very important.

Capacity at the Wuhan plant has been installed for 300 units a day or 66,000 annually, while the capacity in Rennes, France, will be twice that. Both plants are expected to operate at capacity next year.

The 508s built in China will be essentially the same as those in Europe. On the exterior, bumpers will be slightly different because of the differences in license plate shapes, and the Chinese cars will be offered in lighter colors to match local demand. On the interior, Chinese cars will have an adjustable back seat as well as a button command that when pressed moves the front passenger seat to its most forward position.

“In many cases, parents will be buying the car, and they will be driven by their child who has a driver’s license,” predicted Hughes Rebbelinck, the project director.

Following local trends, China’s cars will all be four-door sedans while in Europe about half the cars will be station wagons.

Rebbelinck said that the Chinese cars will have 85-90 percent local content. Most of the systems and modules in the 508 will be provided by the same multinational suppliers to both plants.

Some parts unseen or touched by the customer will be supplied by regional suppliers in both China and Europe. PSA expects the quality to be the same in both markets.

Powertrains will differ.

Some 73 percent of European drivers are expected to choose diesel engines of 1.6, 2.0 and 2.2 liters. Gasoline engines will be of 1.6 and 2.0 liters. In China, all cars will have gasoline engines of 2.0 and 2.2 liters. Some European drivers will choose manual or automated manual transmissions, while all Chinese cars will have full automatics.

In Europe, the car replaces the Peugeot 407 in the D-segment, in competition with the VW Passat and Renault Laguna. In China, the Toyota Camry and Honda Accord are big competitors in the segment.

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