A Peugeot Onyx concept car at the Paris Mondial de l'Automobile

French carmaker Peugeot is building its fourth factory in China with its local partner Dongfeng Motor Corp.

The company said it has received approval from the municipality of Chengdu to build the factory in Sichuan province, which will hace capacity to make 300,000 sport-utility and multipurpose vehicles per year, raising the manufacturers' joint capacity to one million per year by 2016.

Production at the new plant is expected to begin in late 2016, according to the Paris-based company. It will build vehicles under the Citroën and Peugeot and Fengshen brands.

The companies jointly operate three other factories in Wuhan that make 750,000 cars per year at present.

Peugeot and Dongfeng are targeting to sell 50,000 vehicles in 2014 in China, the world's largest car market. By 2020, the companies are planning to boost sales to 1.5 million per year.

Recently, Dongfeng became a major shareholder in Peugeot along with the French government, diluting the holding of the Peugeot family. Wuhan-based Dongfeng bought a 14% stake in Peugeot in May.

The new holding structure came after the company's €3bn ($4.1bn, £2.4bn) capital infusion to avoid a crisis amid declining sales.

Europe's second-largest car maker by volume had reported a 4.9% decline in global vehicle deliveries in 2013, hit by the deepest and longest recession in the European car industry in decades.

Growth in Asia has been a key element of Peugeot's turnaround strategy. China's auto sales rose 11% in the first five months of this year, with deliveries by the Dongfeng-Peugeot venture surging 18%, according to Bloomberg.

The company has another joint venture with Chinese firm Changan at Shenzhen which makes Citroen DS cars.

Volkswagen, Ford Motor, Fiat's Chrysler division and Renault are also looking to boost production in China.