PSA targets 50% of sales outside Europe (China, Latin America, Russia) by 2015

Starts joint venture with Changan Automobile in China, will build a 300,000-unit plant in India

2011/08/08

Summary

 PSA's global sales rose 13% from 2009 to an all-time high of 3.602 million vehicles. Sales remained low at 1.7% growth in Europe but increased significantly in non-European markets such as China, Latin America and Russia. As a result, sales outside Europe rose from 32% to 39%.

 PSA has a target to generate 50% of sales outside Europe by 2015 and is expanding businesses in emerging markets toward that goal. It is strengthening a joint venture with Dongfeng Motor in China and will start a new joint venture with Changan Automobile. PSA will re-enter the Indian market and build its own plant there with an annual capacity of 300,000 vehicles.

 PSA will increase the number of high-end models under Peugeot and Citroen brands characterized by high quality and added values that currently account for small portions in its line-up. In this way, PSA plans to enhance brand images while increasing profitability.

 Regarding emissions reduction plans, PSA has a target to sell one million vehicles in 2012 having CO2 emissions of 120g/km or less. It will introduce a diesel hybrid car, Peugeot 3008 HYbrid4, in the second half of 2011.

 PSA's revenues in 2010 rose 15.8% to 56,061 million euros and operating income improved from a loss of 689 million euros in 2009 to 1,796 million euros in income. The Group's Automotive Division is operating under the Performance Plan which has led to an improvement of recurring operating income worth 1,464 million euros ahead of 1,100 million euros target.

 PSA predicts while 2011 will remain challenging in Europe, sales outside Europe will increase. PSA further predicts the operating income of the Automotive Division will increase from 2010 as the effect of the Performance Plan will more than offset the soaring raw material and input costs.



Emerging markets: Moves in China, Latin America, Russia, India and Malaysia

 PSA is set to increase sales outside European markets to 50% by 2015 (from 39% in 2010) and taking actions toward that goal in emerging markets.

 In China, a third plant was built by Dongfeng Peugeot Citroen Automobile (DPCA), a joint venture company formed with Dongfeng Motor, and DPCA started its first export to another country. Approval of a joint venture with Changan Automobile is expected shortly and a plant with an annual capacity of 200,000 vehicles will be built accordingly.

 In Latin America, PSA will launch eight new models in four years to 2014. In Russia, PSA has started production of SUV under three brands, Peugeot, Citroen and Mitsubishi Motors, at a joint venture plant with Mitsubishi Motors.

 In February 2011, PSA announced reentry in the Indian market that it once withdrew from in 2001. PSA will build a plant with an annual capacity of 300,000 vehicles. In Malaysia, PSA will expand production business with a local assembler and increase exports to neighboring countries.

China: Joint venture with Dongfeng Motor (Dongfeng Peugeot Citroen Automobile)

Enhancing partnership with DPCA
 Dongfeng Peugeot Citroen Automobile (DPCA), a joint venture company formed between PSA and Dongfeng Motor, sold a record-high 376,000 vehicles in 2010, up 38% from 2009, and has set a goal of a 5% market share in 2015 (3.4% in 2010). In September 2010, PSA and DPCA announced they would execute the following five plans to further strengthen their partnership:
Governance system Increase efficiency of DPCA governance system to deal with the Chinese market more promptly.
Product plan Launch at least a new model per brand a year, a total of 12 brands in five years, including remodeling of existing vehicles and introducing all-new models. A mid-sized model, Peugeot 508, was launched in 2011 to be followed by a new Citroen model.
Clean vehicles
and engines
Reduce the CO2 emissions of PSA vehicles sold in China by half in ten years to 2020. For this goal, DPCA will introduce six new engines ranging from 60 to 150kW in the next five years to renew its entire engine lineup. DPCA also plans to launch vehicles with the start-stop system in 2011 and introduce full-hybrid and plug-in hybrid cars in the future.
New plant
construction
DPCA to build a third plant to meet the fast growing demand and produce midrange and lower midrange models as does the first plant which is in near-full operation.
Sales DPCA to continue enhancing sales networks of Dongfeng Peugeot and Dongfeng Citroen to have distributors in 300 cities in China by 2012 for the two brands each. As part of the Asian region development strategy, consider exporting assembled units and CKD units produced by DPCA to other countries.
Construction of a third plant started by DPCA in Wuhan
 In May 2011, DPCA started construction of a third plant in the City of Wuhan in Hubei. The plant will have an annual capacity of 150,000 vehicles when the first phase of construction is completed in 2013, and 300,000 vehicles when the construction is completed in 2015. DPCA will have an annual capacity of 750,000 vehicles for three plants combined in 2015. The third plant will produce vehicles built on PSA's first new platform.
Export to Egypt started by DPCA
 In June 2011, DPCA shipped 120 units of Peugeot 408 to Egypt from its plant in Wuhan, Hubei, marking the first export of vehicles assembled by DPCA in China. The company plans to increase export quantities in several years to come. This makes Peugeot the third global brand, after GM and Honda, produced in China and exported to other countries.

Source: PSA Press Release 2010.9.21/2011.5.18, Automotive News Europe 2011.6.30

China: Joint venture with Changan Automobile Group

 In July 2011, the approval of the National Development and Reform Commissions of China was granted for PSA's joint venture with Changan Automobile Group. The two companies will establish a JV company at 4 billion RMB on fifty-fifty basis to produce and sell passenger cars and light commercial vehicles. To achieve this goal, Changan Automobile Group's existing plant in Shenzhen will be refurbished entirely to build a JV plant capable of producing 200,000 units of assembled vehicles and 200,000 units of engines. The companies will initially launch Citroen DS series and develop the original joint-venture brand, to be followed by launch of Peugeot and Changan brands. A research and development center will be established at the plant. The two companies will initially invest 8.4 billion RMB (including the capital fund).

Source: PSA/Changan Automobile Group Press Release 2011.5.18/2011.7.18

 

Latin America: Investing 700 million euros and increasing market share to 7% in 2015

 PSA sees Latin America as a market of high growth potential, as are China and Russia. The company will invest a total of 700 million euros in two years through 2012 to increase productivity of its plants there for management turnaround and break-even in 2011. PSA will launch a total of eight new models in four years through 2014 while reducing the number of platforms from four to two toward a targeted market share of 7% in 2015 (5.4% in 2010).
 PSA currently assembles vehicles at Porto Real plant in Brazil and Palomar plant in Argentina. In 2010, the company began producing the Peugeot Hoggar pickup trucks in May and Citroen C3 Aircross MPV in September, both at the Brazilian plant. In November, PSA began production of the Peugeot 408 notch-back at the Argentine plant. The company plans to launch the Citroen C3 Picasso MPV in 2011.

Source: PSA Presentation Full Year 2010 Results, Press Release 2010.11.5

Russia: Production of SUV started at Kaluga Plant under joint venture with Mitsubishi Motors

 The Russian market entered a new growth period in 2010 with a 30% increase from 2009 to 1.91 million vehicles in total. PSA sold 56,000 vehicles in 2010, up 33.3%, with a new market share of 2.9%.
 In September 2010, PSA and Mitsubishi Motors began production of the Peugeot 4007, Citroen C-Crosser and Mitsubishi Motors Outlander SUVs at their joint-venture plant located in Kaluga, Russia (180km southwest of Moscow). The plant began producing Peugeot 308 in April and the Citroen C4 in July 2010. The plant's capacity is to be increased to 125,000 units in 2012.

Source: PSA Presentation Full Year 2010 Results, Press Release 2010.9.17

India: Reentering Indian market and building a plant with an annual capacity of 300,000 vehicles

 In February 2011, PSA announced reentry in the Indian market with a first-phase plan to produce mid-sized sedans under the Peugeot brand. In June 2011, PSA disclosed plans to build a 100% owned plant in Sriperumpudur, Tamil Nadu, with an annual capacity of 300,000 vehicles that will create jobs for 5,000 directly employed and 15,000 indirectly hired workers. The plant will cost 40 billion rupees.

Source: PSA Press Release 2011.2.9, Tamil Nadu State Government Press Release 2011.6.29

Malaysia: Production and sales of Peugeot 207 started

 In July 2010, an agreement was reached between Peugeot and Naza Group, a leading automobile assembler in Malaysia, regarding the assembly of new sedans. The production of the 207 sedan began accordingly in the second half of 2010 followed by a market launch in November 2010 including exports to Thailand. Peugeot and Naza see Malaysia as a production base for right-hand drive vehicles in Asian markets.

Source: PSA Press Release 2010.7.12

 



Peugeot 508 and Citroen DS series of premium models launched to enhance the brand image

 The lineup of upmarket models featuring high quality, high value added and high prices will be enhanced for both Peugeot and Citroen brands to improve the brand image, win new customers and increase profits.

 In 2011, Peugeot launched mid-sized upmarket models, 508 sedans and station wagons, integrating 407 and 607 according to the upmarket model planning. Citroen will launch the DS5 to follow the near-premium DS4. According to PSA, the ratio of upmarket models to sales increased (from 14% a year ago) to 17% in the first half of 2011.

New models being launched by PSA in 2011 to 2012

  Launch Outline
*Peugeot
508/508 SW
Spring 2011 Mid-sized sedan and station wagon (successor model that integrates the mid-sized Peugeot 407 and full-sized 607). The sedan is launched in China as well. Annual sales are set for both versions combined to 100,000 units in 2010 and 200,000 units in 2012, including 65,000 units in China. CO2 emission is 109g/km.
*Citroen DS4 Q2 2011 A near-premium model from Citroen and the second model in the DS (Distinctive Series) series. A coupe style five-door hatchback based on the C4 small-sized hatchback.
*Citroen DS5 End of 2011 A near-premium model from Citroen and the third model in the DS series. Unveiled at 2011 Auto Shanghai in April 2011. A five-seat crossover with a higher seat position than the C5 sedan.
compact SUV 2012 Redesigned by PSA based on Mitsubishi Motors' RVR (ASX in Europe) for Peugeot and Citroen. Annual sales targeted at 50,000 units. Rivals with Toyota RAV4.
New models launched by PSA in 2010
  Launch Outline
*Peugeot RCZ Summer 2010 A two-door coupe. The first upmarket model launched to enhance the Peugeot brand image. Based on the production model 308's platform. Powered by a 1.6-liter twin-scroll turbocharged gasoline engine or a 2.0-liter turbocharged diesel engine.
*Citroen DS3 March 2010 Citroen's first near-premium model and the first in the DS series. A three-door hatchback with upgraded interior and exterior finishes, based on the Citroen C3 compact hatchback. Rivals with the BMW MINI.
Citroen C4 End of 2010 A compact five-door hatchback, roomier than the previous model resulting in greater riding comfort for passengers. The 408-liter luggage space is the largest in its class.
Source: PSA Presentation Full Year 2010 Results, Automotive News Europe 2010.4.28/2010.6.3/2010.8.31/2011.4.19/2011.6.25
(Notes) 1. Asterisk (*) indicates models launched by PSA as premium models.
2. PSA defines its premium models as vehicles that offer a level of interior and exterior quality and driving pleasure that serves as a benchmark in specific segments. Premium models other than those listed above include Peugeot 207CC/308CC/3008 in the A, B and C segments, and Peugeot 407/4007, Citroen C5/C6/C-Crosser in the D and E segments.

 



Emissions reduction plans: Making start-stop systems available on more models, launching Peugeot 3008 HYbrid4

 PSA is working under emissions reduction plans toward selling one million vehicles with CO2 emissions of 120g/km or less in 2012 (versus 798,000 units in 2010). In 2010, PSA announced a new-generation start-stop system that reduces CO2 emissions by up to 15%, and installed the system in seven models by March 2011. PSA will launch Peugeot 3008 HYbrid4, the world's first diesel hybrid car, in the third quarter of 2011.

 PSA and BMW are to form a joint venture company in 2011 for joint development and production of hybrid systems. The resulting products will go into their vehicles starting in 2014. PSA and Ford Motor are to jointly develop diesel engines that will meet Euro 6 emission standards slated for introduction in Europe in 2014.

PSA:Emissions reduction plans (Target: Sell 1 million vehicles with 120g/km or less CO2 emissions in 2012)

Electric vehicles
(EV)
Received OEM supply of electric vehicle i-MiEV from Mitsubishi Motors and launched them at the end of 2010 as Peugeot iOn and Citroen C-ZERO.
PSA and Mitsubishi Motors are co-developing technologies to convert the light commercial vehicles Peugeot Partner and Citroen Berlingo being produced by PSA in Spain as electric vehicles (announced in September 2010). The two companies plan to start production of both EV models by the end of 2012.
Diesel hybrid The world's first diesel hybrid, Peugeot 3008 HYbrid4, will be launched in the third quarter of 2011 with the front wheels driven by a 2.0-liter four-cylinder turbocharged diesel engine (max. power 163ps, max. torque 300Nm) and the rear wheels driven by a motor (37ps, 200Nm). It uses a Ni-MH battery pack supplied by Sanyo Electric. It has 3.8L/100km fuel efficiency per EU combined cycle test along with CO2 emissions of 99g/km.
New engines 1.0-/1.2-liter compact three-cylinder gasoline engines have been developed for launch in 2012. The 1.0-/1.2-liter naturally-aspirated engines will be produced at Tremery Plant in France from 2012 at an annual quantity of 640,000 units. The 1.2-liter turbocharged engines will be produced at the Douvrin Plant in France from 2013 at an annual quantity of 320,000 units.
Start-stop systems The e-HDi next-generation start-stop system was announced in June 2010 that combines a belt-driven starter/alternator (second-generation by Valeo), 50Ah lead battery and Euro 5-compatible 1.6-/1.4-liter HDi diesel engines. The system deactivates the engine when the vehicle speed drops below 6km/h and restarts it in 0.4 seconds when the brake pedal is released. The system is characterized by quiet and quick restarting and reduces the CO2 emissions by up to 15%.
The system is used in the Citroen C5, C4, C4 Picasso, C3, DS3, Peugeot 308 and 508 as of March 2011. PSA plans to sell one million vehicles with the start-stop system by 2013 (PSA has been using the first-generation start-stop system since 2004 on the gasoline-fueled Citroen C3 and C2 models).

Source: PSA Press Release 2010.6.9/2010.9.29

 

PSA with BMW: Establishing a joint venture company to develop and produce hybrid systems

 PSA and BMW announced the establishment of a joint venture company, BMW Peugeot Citroen Electrification, that will develop and produce hybrid system components (announced in February 2011).The two companies will invest 100 million euros in total and the new company will start operating in the second quarter of 2011. The developed components will be used on their vehicles in 2014 and also sold to other OEMs. Research, development and procurement will take place in Munich, Germany, and the new company will hire 400 workers by the end of 2011. Production will take place in Mulhouse, France with 250 workers (with full operations starting in 2014).
 The components to be developed will include battery packs, generators, power electronics, electric machines, chargers and software for hybrid systems. The two companies will seek lower development expenses, use of standardized parts, reduction of development time, cost reduction by scale expansion etc., through joint development and production.

Source: PSA/BMW Press Release 2011.2.2/2011.2.28

PSA with Ford:Joint development of Euro 6-compatible next-generation diesel engines

 In September 2010, PSA and Ford announced the joint development of Euro 6-compatible next-generation diesel engines. The two companies plan to invest a total of approximately 300 million euros in developing diesel engines for passenger cars and commercial vehicles for production starting in 2013.
 PSA and Ford have been engaged in a partnership, the Gemini Project, which started about ten years ago. The two companies have invested a total of over 2 billion euros in the past ten years in the joint development of diesel engines, and have produced 16.5 million diesel engines before the end of 2010. The engines are used on approximately 30 models under the Peugeot, Citroen, Ford, Mazda, Volvo, Jaguar, and Land Rover brands.

Source: PSA/Ford Press Release 2010.9.29

 



Performance Plan:Profitability improvement in Automotive Division worth 3.7 billion euros in 2010-2012

 The Performance Plan (targeting improved profitability) being followed by PSA's Automotive Division since 2010 called for profitability improvement of 1.1 billion euros a year, a total of 3.3 billion euros through 2012. In 2010, the Performance Plan delivered 1.464 billion euros, more than the targeted amount, and the target through 2012 was raised accordingly by 400 million euros, to a total of 3.7 billion euros.

 Of the 3.7 billion euros improvement targeted in the Performance Plan, 30% is to come from the improvement of sales, 15% from emerging markets, and 55% from productivity improvement and cost reductions. The Plan delivered the following results through 2010:

Progress of PSA Performance Plan (profitability improvement plan in 2010-2012)

  2009 2010 2012
(Target)
Sales improvement Market share in Europe 13.8% 14.2% -
Fleet market share in Europe 14.7% 15.0% 18.0%
Sales of vehicles with 120g/km or lower CO2 emissions 757,000 798,000 1,000,000
Emerging markets China market coverage 33% 34% 40%
Latin America market coverage 40% 55% 57%
Russia market coverage 46% 51% 77%
Profitability
improvement,
cost reductions
Capacity utilization in Europe 80% 90% 105%
Production hours per vehicle (2009 base 100) - -2% -20%
Development productivity (2009 base 100) - -11% -20%
Cost reductions   110 million
euros
400 million
euros
Procurement from key suppliers 25% 35% 50%

Source: PSA Presentation Full Year 2010 Results

 



Record-high global sales at 3.6 million vehicles in 2010 with 39% coming from outside Europe

 PSA's worldwide sales of assembled vehicles (including CKD unit) in 2010 rose 13% from 2009 to a record-high of 3.602 million units. Unlike the sales in Europe that rose only 1.7% to 2.195 million units, China and Latin America registered drastic growth at 38.2% and 26.7%, respectively. As a result, sales outside Europe grew from 32% to 39% of PSA's global sales.

 Among different models sold, upmarket models that were launched in 2009-2010 such as Peugeot RCZ, Peugeot 3008, and Citroen DS3 enjoyed brisk sales and contributed to an increase of their ratio to global sales.

 PSA's worldwide sales in January-June 2011 remained the same as in the same period a year earlier at 1.86 million vehicles. Sales in Europe fell 5.3% due to the discontinuation of the scrap incentives but sales continued to grow outside Europe such as China, Latin America and Russia.

 Regarding the full-year market growth in 2011, PSA predicts 0% growth in Europe, 10% growth in China, 4% growth in Latin America, and 15% growth in Russia. PSA predicts hardships in sales in Europe but expects a sales increase outside Europe because of the growth of joint venture businesses in China and entry into the Indian market.

PSA's worldwide vehicle sales by region

(1,000 units)
  2007 2008 2009 2010 Jan.-Jun.
2010
Jan.-Jun.
2011
Europe 2,542 2,231 2,159 2,195 1,206 1,154
Russia 37 59 42 56 21 35
Latin America 266 263 232 294 127 154
China 209 179 272 376 176 195
Others 181 219 141 204 87 113
Total assembled vehicles 3,234 2,952 2,846 3,125 1,618 1,652
Total CKD 195 308 342 477 238 208
Global sales 3,428 3,260 3,188 3,602 1,856 1,860

Source: PSA Press Release 2011.1.13, Q1 and 3 Months 2011 - Sales and Revenues

 

PSA: Vehicle sales in Europe by model

Peugeot Brand
(units)
  2009 2010 Jan.-Apr.
2010
Jan.-Apr.
2011
107 118,298 106,842 34,013 33,173
1007 5,677 411 - -
206 112,789 121,828 50,717 41,403
207 372,821 310,827 119,146 94,146
307 3,470 115 - -
308 225,949 181,976 66,767 56,990
3008 49,506 117,819 41,630 41,565
5008 6,656 71,861 26,488 25,053
407 38,937 29,321 10,302 4,049
508 0 721 - 18,945
607 1,896 1,229 - -
807 6,891 5,580 1,879 2,236
4007 8,466 5,529 1,837 1,335
RCZ 88 11,913 1,159 6,401
iOn - - - 464
Bipper 8,076 10,952 4,323 3,094
Partner 43,176 42,398 14,633 13,202
Expert 3,865 4,281 1,506 1,721
Boxer 742 871 - -
Others 626 336 1,308 636
Total 1,007,929 1,024,810 375,708 344,413
 
Citroen Brand
(units)
  2009 2010 Jan.-Apr.
2010
Jan.-Apr.
2011
C1 118,702 102,100 33,936 30,390
C2 42,938 3,298 - -
DS3 205 53,220 10,155 25,644
C3 173,356 233,076 84,971 71,065
C3 Picasso 75,793 76,565 31,037 24,982
Xsara 41,311 25,786 11,633 3,731
C4 96,091 71,624 27,195 45,358
C4 Picasso 136,038 120,047 46,289 37,105
C5 85,003 75,189 28,235 23,250
C6 1,633 1,362 - -
C8 6,134 5,439 1,826 1,915
C-Crosser 8,676 7,023 2,307 1,540
C-ZERO - 35 - 573
Nemo 17,064 12,030 5,425 3,262
Berlingo 67,033 57,917 20,304 16,544
Jumpy 3,271 3,326 - -
Jumper 1,673 1,373 - -
Others 227 269 6,038 2,873
Total 875,148 849,679 309,351 288,232
PSA Total
PSA total 1,883,083 1,874,491 685,061 632,646
Source: Automotive News Europe 2011.3/2011.6
(Notes) 1. The figures are taken from 29 countries in Europe. Vehicles registered as commercial vehicles are excluded.
2. The PSA total includes several models that are not included in any of the brands shown.

 



Operating income sees a turnaround in 2010 at 1,796 million euros, further growth expected in 2011

 PSA's revenues in 2010 rose 15.8% from 2009 to 56.06 billion euros thanks to successful new model launches, increased market shares, an increase of global demand and other favorable factors. The recurring operating income saw a turnaround from 689 million euros in loss to 1,796 million euros in black. This and the favorable turn of the financial situation have led to full repayment of the French State loan of 2 billion euros by the end of April 2011, earlier than originally promised.

 Automotive revenues increased 8.2% and recurring operating income marked a substantial improvement from a loss of 1,257 million euros to 621 million euros in the black. The Performance Plan of the Automotive Division contributed to improving the recurring operating income by 1,464 million euros (versus 1.1 billion euros target).

 The Automotive Division's recurring operating income for the full year of 2011 is likely to exceed that in 2010 as the 1.1 billion euros improvement by the Performance Plan offsets the increase in raw material and input expenses (although a profit decline of approximately 150 million euros is inevitable in the first half of 2011 due to the procurement delay of electronic parts caused by the Great East Japan Earthquake of March).

PSA's Consolidated results

(millions of Euro)
  2006 2007 2008 2009 2010 Jan.-Mar.
2010
Jan.-Mar.
2011
Sales and
Revenues
Manufacturing Div.
(thereof) Automotive
55,198
44,566
57,132
45,519
52,705
41,643
46,885
38,265
54,502
41,405
14,663
10,619
16,202
11,262
Financing Div. 1,761 1,999 2,088 1,823 1,852 457 470
Eliminations (365) (455) (437) (291) (293) (1,135) (1,258)
Total 56,594 58,676 54,356 48,417 56,061 13,986 15,414
Recurring
operating
income
Manufacturing Div.
(thereof) Automotive
515
267
1,144
858
(7)
(225)
(1,187)
(1,257)
1,289
621
   
Financing Div. 604 608 557 498 507    
Total 1,119 1,752 550 (689) 1,796    
Net profit 183 885 (343) (1,161) 1,134    
Operating
margin
Consolidated 2.0% 3.0% 1.0% -1.4% 3.2%    
Automobile 0.6% 1.9% -0.5% -3.3% 1.5%
Source: PSA Full Year Results 2010, Annual Report 2008
(Notes) 1. The manufacturing divisions other than Automotive Division include Gefco, a Transportation and Logistics division with 3.351 billion euros in revenues, and Faurecia, an Automotive Equipment division with 13.796 billion euros of revenues in 2010.
2. Recurring operating income is PSA's management indicator in use since 2007 (equivalent of operating income).

 

PSA's Automotive Division: Factors behind operating profit and loss in 2010

(millions of Euro)
  Profit increase/decrease
Operating environment Market demand volume 414 331
Market mix (142)
Input costs (168)
Currency 393
Performance Net price effect 1,464 37
Market share volumes 233
Warranty, SG&A, fixed costs, own network 12
Production & procurement 1,121
R&D 9
Others 52
Total 1,878

Source: PSA Presentation - Full Year 2010 Results
(Note) PSA reported a recurring operating loss of 1,257 million euros in 2009 and a recurring operating profit of 621 million euros in 2010, resulting in a profit increase of 1,878 million euros.

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