In a statement posted on PSA's Web site, the partners said they will open a third Chinese assembly plant in the city of Wuhan, next to an existing PSA assembly plant in the city.

With an annual production capacity of 150,000 units, the new Wuhan plant will start producing small and mid-sized vehicles in 2013. By 2015, the joint venture expects its three Chinese plants will produce 750,000 units a year, up from 450,000 today.

According to J.D. Power and Associates, the PSA Group sold 226,738 cars in China in the first eight months of the year. The group's Peugeot and Citroen brands together combined for a 3.0 percent market share.

The partnership's plan calls for the introduction of 6 new engines with power output ranging from 80 hp to 200 hp. The partners also plan to launch 12 new models, introduce stop-start technology and develop a lineup of hybrid-powered vehicles.

With its new family of engines plus stop-start technology, the partnership expects to cut per-vehicle carbon dioxide emissions by 50 percent by 2020.

To market the cars and boost annual sales, Dongfeng Peugeot and Dongfeng Citroen each expect to have dealerships in China's 300 largest cities. The joint venture currently has more than 500 franchised dealers in China.

PSA also says it may export some Chinese-made vehicles to other Asian countries.