PSA to target 50% of sales outside Europe in 2015 and 67% in 2020

GM acquires 7% stake in PSA, forming comprehensive business ties



 PSA's unit sales in 2011 fell 1.5 % y/y to 3.549 million units, due to declined sales in Europe affected by its credit uncertainty. Although revenue grew by 6.9% y/y to 59.91 billion euros thanks to increased premium models, operating income fell by 26.8 % y/y to 1.32 billion euros. Automotive Division posted an operating loss of 90 million euros as a result of fiercer price competition, effects of the Great East Japan Earthquake and soaring material costs. (In 2010, operating income of 620 million euros posted.)

 PSA plans to improve its financial performances by expanding sales outside Europe, introducing premium cars and competitive compact cars, reducing procurement/fixed costs and collaborating with other companies.

 As for markets outside Europe, the Group is focusing on businesses in emerging countries. It aims to raise the ratio of sales outside Europe from 42 % in 2011 to 50 % in 2015 and to two-thirds in 2020. Especially in China, it is increasing production capacity at its two joint ventures, Dongfeng Peugeot-Citroen Automobile and Changan PSA. The OEMs are expected to establish operations to output a total of 950,000 units/year in 2015.

 In order to improve the product mix, PSA will introduce premium models to both Peugeot/Citroen brands. In 2012, it plans to launch the Peugeot 208, the fuel-efficient, much lighter successor of the most selling Peugeot 207, as well as four models of the world premier diesel HVs.

 In order to improve free cash flow that dropped to negative 1.6 billion euros in 2011, in 2012 PSA will implement a cash management program. Specifically, it will save 1 billion euros by reducing procurement/fixed costs and 1.5 billion euros by selling off assets. It will also rein in capital expenditure and R&D spending.

 In order to reduce development/procurement costs, PSA is promoting tie-ups. In February 2012, GM and the Group agreed to form a business alliance with capital involvement. GM has acquired a 7 % equity stake in PSA. The partners will share selected platforms, modules and components and jointly purchase parts on global basis. With the BMW Group, PSA established a joint venture in October 2011 to develop and manufacture HV/EV components.

Related Reports: PSA (Aug. 2011)

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