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French car parts maker Faurecia (including leather interior systems) has announced a joint-venture deal with Dongfeng, the Chinese state-controlled automotive group, in a move designed to increase its presence in the world's biggest auto market. Faurecia, majority-owned by PSA Peugeot Citroen, said on March 31 the venture would target sales of €2 billion ($2.2 billion) to Dongfeng and its carmaking partners such as Peugeot, Nissan, Honda and Kia, as well as the Chinese carmaker's own brands.
The deal "will contribute to the steady and profitable growth of Faurecia in China", Faurecia Chief Executive Yann Delabriere said in a statement.
Faurecia's shares are valued at €5.12 billion ($5.5 billion).
Faurecia is already expanding in China, where sales last year rose 20% to €2.23 billion. While foreign carmakers are required to operate through minority holdings in local joint ventures, suppliers in China have in general been less restricted.
Dongfeng also owns a 14% stake in Faurecia's parent, Peugeot, acquired as part of a €3 billion bailout for the troubled French carmaker last year.
Unlike such carmaking ventures, however, the Faurecia-Dongfeng business will be consolidated in the French company's accounts, while bringing in new business with Dongfeng and its other partners, Faurecia said.
The venture will manufacture and sell Faurecia interior and exterior parts before expanding to include seating, exhausts and a new joint research and development center at China's Wuhan automotive hub. Financial terms were not disclosed.