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Peugeot, Toyota plan deal
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June 29, 2001: 9:27 a.m. ET
Peugeot-Citroen, Toyota to sign deal to build new small car in Europe
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LONDON (CNN) - Peugeot-Citroen and Toyota Motor of Japan said on Friday they were in talks to jointly build a new small car in Europe.
Toyota President Fujio Cho and Peugeot Chief Executive Jean-Martin Folz will sign an agreement in Brussels on July 12, the companies said.
Japan's biggest automaker and France's No. 2 have been in talks for several months and in April agreed to develop new technologies to reduce carbon-dioxide emissions in new vehicle, as part of a European Union commitment.
The new compact will be a passenger vehicle priced lower than those in the current small-car segment and will be built primarily for the European market, especially the east.
"Peugeot is poorly represented in eastern Europe and has no manufacturing base there," Adam Collins, analyst at Schroder Salomon Smith Barney in London, told Reuters.
Peugeot (PUG) acknowledged it could no longer operate in an environment where all major automaker are sharing vehicle platforms, production and design facilities to cut cost.
The group's strategy is "aimed at reaching agreements on the joint development and production of mechanical components and platform elements, with the objective of obtaining economies of scale," Peugeot said.
Toyota, the world's third-biggest automaker, is one of two Japanese car makers to have not yet signed up an international partner.
Peugeot's domestic rival Renault (PRNO) owns 37 percent of Nissan; DaimlerChrysler (FDCX), the world's fifth-biggest, has a controlling stake in Mitsubishi Motor. Ford, the world No. 2, holds a 33 percent stake in Japan's fifth-biggest automaker Mazda.
Toyota has been pushing hard to boost its presence in continental Europe, where its market share is hovering at a paltry 3.5 percent, according to Reuters. The Japanese company builds the popular Yaris small car at its Valenciennes plant in northern France.
Peugeot and Toyota plan to pitch the new compact below the Yaris and Peugeot's 106. Renault has a similar plan to develop a  5,000 ($4,234) car at the plant of its Romanian unit Dacia by 2004. 
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