Peugeot Citroen's partners in Wuhan say they are not alarmed that the French motor company is likely to withdraw from a similar joint venture in Guangzhou. Peugeot Citroen has a 22 per cent stake in Guangzhou Peugeot Automobile Co. Last month the French Trade Minister Yves Galland said the company would probably pull out of the venture. The secretary of the Chinese representative general manager at Dongfeng-Citroen in Wuhan, Wang Zuohang , said the move would allow Peugeot Citroen to concentrate its efforts on their venture. 'I think the French partner will place great emphasis on the Wuhan car joint venture now,' he said. 'There are not many big projects they are involved in China these days.' The Wuhan joint venture is 70 per cent owned by the Chinese partner, Dongfeng Motor Corp. Peugeot Citroen owns 25 per cent, Societe Generale 4 per cent and Banque Nationale de Paris 1 per cent. It is by far the largest foreign-funded project in Wuhan. It forms the backbone of the car industry, one of the city's main industries. The first phase of the Dongfeng-Citroen venture requires investment of more than 10 billion yuan (about HK$9.2 billion), providing for annual production capacity of 150,000 vehicles. More than 6.6 billion yuan has already been invested. Mr Wang is optimistic Dongfeng-Citroen will not share a similar fate to the Guangzhou joint venture. 'Things are not the same here as at the one in Guangzhou' he said. 'We are producing [Peugeot Citroen's] new model. And we have been rapidly localising the content of our product to save transportation costs and import tariffs.' Last year more than 9,000 Citroen ZX cars were produced and the number is expected to gradually increase to 150,000 in 2000. 'We are progressing as planned and should be able to break even in 1999,' Mr Wang said. Dongfeng-Citroen's target customers are taxi drivers and families. Next year it will focus more on business clients. Wuhan Economic Commission director Cui Yuelin said sales of Citroen cars should be stronger next year when a new model would hit the streets. Ms Cui said it should help Citroen gain the acceptance of government officials and open up this area of the market. She said that although Wuhan would not, at least in the short term, issue new taxi licences, there was still room for Citroen to expand in this area. Only one-third of the 12,000 licensed taxis in the city used Citroen cars. Although China's car industry, including car and parts production, achieved sales worth 2.1 billion yuan last year, it has not made a profit. Ms Cui said some car and component manufacturers were still at the start-up stage. She believed the industry should make a combined pre-tax profit this year. Under the municipal government's plan, Wuhan's car industry should yield sales worth 30 billion yuan and pre-tax profits of four billion by 2000. That is on projected production of 150,000 sedans, 100,000 light-duty cars plus other vehicles and parts. The Wuhan Economic & Technology Development Zone was established to help set up the Dongfeng-Citroen plant. Zone administrative committee vice-chairman Zhang Peizeng , said it had also attracted two other car-makers and more than 30 parts manufacturers. Among them is Wuhan Grand Motor Co, a joint venture with a Taiwanese investor and South Korea's Hyundai group. It started production last June. The first phase has a production capacity of 60,000 units. Its production has reportedly been halted after Beijing requested to review its operations. The other is Wuhan Fortune Automobile Co. The company is partly owned by Malaysia's Lion Group. It has an annual production capacity of 60,000 units and its first van is expected to roll off the assembly line next year.