The plant will offer the capacity to build 300,000 vehicles a year eventually and will be dedicated to the production of SUVs and MPVs badged as Dongfeng Citroën and Dongfeng Peugeot and Fengshen.

The joint venture currently runs three plants in Wuhan, which are running on two shifts for a total potential capacity of 750,000 units a year. With the fourth plant, production capacity will be lifted to one million units a year in 2016.

Earlier this year PSA announced a rescue deal with China’s Dongfeng Motor and the French government to raise €3bn, with both parties each investing about €800m in return for 14% stakes. A further €1.4bn will be raised by the firm’s existing shareholders.

The firms added that the joint venture’s full-year objective for 2014 is to sell more than 650,000 vehicles in China.