French car-maker Peugeot Citroen has agreed to a number of cost-saving measures to ensure its joint venture in Wuhan will meet its break-even target by 1999. Dongfeng-Citroen Automobile Co official Wang Zuohang said one of the measures involved slashing the number of French expatriates at the plant by 20 to 30 in two years. The cut would save about 40 million yuan a year. In the agreement made last month, charges for component packaging also will be halved and price rises frozen for two years excluding inflation-related adjustments, Mr Wang said. Dongfeng Motor Corp, which holds a 70 per cent stake in the joint venture, also hopes the French partners will agree to delaying interest payments and cut component prices. Peugeot Citroen has a 25 per cent interest in the venture, Societe Generale 4 per cent and Banque Nationale de Paris 1 per cent. The joint venture will slow its recruitment drive to limit the number of employees, including French employees, to 4,500 this year. Local content will be increased from the present 40 per cent to 60 per cent by the end of the year and raised to 80 per cent next year. Dongfeng-Citroen director Zhang Shiduan warned this year would be the most difficult for the company. The company would recover if it could produce 100,000 cars a year at a unit cost of 85,000 yuan for sale at 145,000 yuan. Last year the plant produced more than 9,000 cars and the number is expected to increase to 150,000 by 2000. The company is still struggling with start-up difficulties and lacklustre sales. It has outstanding loans of about 4.8 billion francs (about HK$6.43 billion) and the repayment of loans and interest will peak this year. With state support, the joint venture will borrow 1.6 billion yuan for working capital this year. The joint venture will be the only one Peugeot Citroen has in China, after it officially pulls out of its 22 per cent-owned Guangzhou joint venture. The China Business Times reported that the Guangzhou Peugeot Automobile Co lost 600 million yuan in the past two years as production dwindled to a few thousand vehicles.