The French carmaker PSA Peugeot Citroen will assemble vehicles in Venezuela from the end of 2014 in partnership with the Caracas government, the industry minister said Tuesday.
The Venezuelan government had already announced a PSA assembly plant would be built in the country, without providing further details.
Industry Minister Ricardo Menendez declared Tuesday a "strategic alliance for the creation of a joint venture between the Bolivarian government (Venezuela) and representatives of Peugeot."
The plant, with a production capacity of 15,000 vehicles per year, is expected to produce 5,000 cars in the first year for the Venezuelan domestic market, said Menendez.
President Nicolas Maduro said a 51 percent stake would go to the state but said if it was necessary for Peugeot to be the majority stakeholder "this is possible."
"We are flexible in this alliance. The important thing is for cars to be produced in this country and that we advance in car manufacturing technology," he said.
Also Tuesday Maduro signed a decree under new emergency powers to set limits on car prices, both new and used, in a bid to stem speculation.
Because of strict currency controls, new imported cars are scarce and expensive in Venezuela. So used cars are highly sought after and actually appreciated in value over time. Some people buy them as an investment hedge against inflation.
Congress gave Maduro emergency powers to act by decree three weeks ago. He has already ordered price cuts for domestic appliances and limits on business profits.
This comes as Venezuela prepares for local elections on Sunday. They are seen as a test of the popularity of Maduro, who was elected in April after his predecessor Hugo Chavez died of cancer the previous month.