Mitsubishi and PSA Peugeot Citroen will borrow 320 million euro to triple production for their joint venture in Russia.
In June 2012 the two companies will take out seven-year loans of a total 170 million euro from the European Bank for Reconstruction and Development (EBRD). Mitsubishi and PSA Peugeot will also borrow 150 million euro in a five-year loan from Societe Generale and other major European financial institutions.
The private-sector European banks and EBRD decided to help the two companies by offering loans which will help them in their Russian business strategy and bolster the business foundation. The Russian JV is 70% owned by PSA and 30% by Mitsubishi, and it started producing car under the two companies’ names in March 2010. The companies plan to raise annual production of the JV at 125,000 units from 40,000 units, and to buy more parts from local suppliers.
Due to the European debt crisis PSA Peugeot has seen weak sales in southern Europe and Mitsubishi announced in February it aims at ending local production in Europe also due to losses in profit, and focus on growth markets such as Russia and Asia.