Trnava, a town in western Slovakia has been shortlisted as one of the potential sites for construction of a new plant for French car maker PSA Peugeot Citroen in central Europe. On Wednesday, the Slovak cabinet approved a draft agreement on investment cooperation between Slovakia, the town of Trnava and the French automaker. Economy Minister Robert Nemcsics decline to provide details of the agreement since the document is confidential. He added that Poland is another potential hot candidate.

Slovakia offers the French carmaker an active structure of sub-contractors, skilled and reasonably priced labor force, suitable infrastructure, and experience with the automotive industry.

PSA Peugeot Citroen, the second largest carmaker in Europe, plans to build a new production plant worth EUR 700 million in central Europe. Its annual production capacity of 300,000 cars will rank it among the largest production plants of this automaker. The French company is scheduled to announce its decision on the locality for the new plant in late January.

The carmaker, operating nine production plants in Europe, wants to sell 4 million cars annually as of 2006. Last year it planned to sell 3.25 million cars. Developing new models and development costs reach EUR 3 billion annually. Peugeot has posted a significant increase in sales in central Europe with its share market more than doubling from 5 to 12 percent over the last five years.

An arm of German carmaker Volkswagen AG already successfully operates in Slovakia.