The Hubei-based Dongfeng Peugeot Citroen Automobile (DPCA), a joint venture between PSA Peugeot Citroen and Dongfeng Motor, is to shelve plans to build a third plant because of concerns of overcapacity, according to China Business News.

Building on the third plant, which was designed to assemble 150,000 vehicles a year, came to a halt as DPCA’s current annual output capacity was deemed more than sufficient to cope with prevailing levels of demand.

The new plant, launched in 2007, was backed by PSA’s chief executive at the time, Christian Streiff, who stepped down in March this year.

DPCA produced 109,784 vehicles in the first half of 2009, up 2.3 per cent year-on-year. Its sales in the same period grew 14 per cent to 117,324 units, according to the Ministry of Commerce. It sold about 52,000 models under the Dongfeng-Peugeot brand, and 65,740 of the Dongfeng-Citroen-branded models.