The company was founded on 26 September 1985 and was defunct by March 1997 when Peugeot sold their stake in the joint venture. Manufacturing two models originally sold via fleet sales, its products were mostly used as taxis or by government employees.
After the company had gone defunct, Honda succeeded where PSA Peugeot Citroën failed cooperating with the Guangzhou government to establish its own joint venture company, Guangqi Honda Automobile.
Component localization targets, set to encourage creation of a local supply chain, exacerbated tensions. They were met late if at all, and while the French initially profited from parts sales, Chinese consumers saw increased component localization from inexperienced suppliers lead to inferior products. In spite of Chinese resistance, Peugeot repatriated profits, and cultural conflicts continued throughout. By 1993 a soured PSA Peugeot Citroën saw its now-inferior models out-completed by better offerings with sales dropping to 2,544 while competing Shanghai VW built no less than 146,000 cars—fifty percent of the overall market. By 1996 the Guangzhou government decided it no longer wanted a French foreign partner. PSA Peugeot Citroën removed itself in 1997, and Guangzhou Automotive chose to begin a new joint venture with Honda.
Peugeot re-entered the Chinese market through Citroën's Dongfeng-Citroën operations with Chinese production of the 307 commencing in April 2004.