SHANGHAI: French carmaker PSA Peugeot has reached an initial agreement to set up a 50:50 vehicle manufacturing venture with China Changan Automotive Group as it speeds up expansion in the world’s largest auto market.

The China venture would make light commercial vehicles and cars, the companies said in a joint statement yesterday, confirming an earlier Reuters story.

The partners were still in discussion over the financial details of the venture, it said.

PSA Peugeot, which already operates a car venture with Dongfeng Motor Group Co, lags larger rivals General Motors and Volkswagen AG.

The lastest deal, if it goes ahead as planned, will enable it to secure a foothold in China's fast-growing light commercial vehicle market, where GM and Ford Motor Co already have a head start.