PSA Peugeot Citroën and Chinese carmaker Hafei have signed a memorandum of understanding to start a feasibility study of a 50-50 joint venture model.

The new venture will manufacture small people carriers (under 10 passengers) for the Chinese market. The vehicles will be produced by Hafei's Chinese plant in Shenzhen.

PSA said the signing of the MOU demonstrated its commitment to speeding up its development in China, one of its international strategic growth regions.

PSA Peugeot Citroën already operates in China through Dongfeng Peugeot Citroën Automobiles (DPCA), a 50-50 marketing and manufacturing joint venture with Dongfeng Motor.