PSA looks to break its dependence on Europe by expanding into emerging markets

The company hopes to improve earnings by cutting costs and by selling more high-end models

2013/07/08

Summary

Global Sales of PSA Under severe sales environment in Europe and substantial decrease in export of CKD kits to Iran due to economic sanctions against Iran, PSA's revenue in 2012 fell 7.5% y/y to EUR 55.46 billion, registering an operating loss of EUR 576 million and a net loss of EUR 5.01 billion.

 To improve its operating performance,, PSA will close its plant in France, slash workers, develop product and procure parts/components jointly with GM, and reduce development cost/capital expenditure.

 Aiming to increase the sales ratio outside Europe to 50% or over by 2015, PSA will invest in production and establishment of sales network in China, Russia, and Latin America to revamp the earning structure. Also, it will redefine Peugeot and Citroen brand images and market them to different customer bases. Also, PSA will market models of the Peugeot 301 and Citroen C4-L for emerging countries, the Peugeot 2008 for global markets, and higher-grade models including the Citroen DS5.

 LMC Automotive forecasts the  global sales of PSA group to decrease by 5.4%, to 2.78 million units in 2013. LMC Automotive indicates: "the immediate problem for PSA is its dependence on the depressed European market. France, Italy and Spain account for over half of European sales. With little in the way of exports to boost sales, the immediate outlook remains bleak." In LMC Automotive's view, beyond this year, PSA group's global sales rise to 2.93 million units in 2014, a 5.3% increase compared with 2013. The growth continues to 3.16 million units by 2016, which is a 13.6% boost in comparison with the group's unit sales in 2012.

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