France’s PSA Peugeot Citroen and China’s Changan Automotive Group said Thursday they had signed an initial agreement to set up a joint venture to produce vehicles in the world’s top auto market.

Peugeot and Changan have signed a letter of intent for the 50-50 venture to make light commercial vehicles and passenger cars, the companies said in a joint statement.

“The new joint venture will be complimentary to the companies’ existing joint ventures,” the statement said.

Peugeot already has a joint venture with China’s Dongfeng Motor Group but intends to further increase its presence in the country.

It announced in January that it aimed to increase sales in China by 30 percent this year, double the growth rate for the country’s entire market.