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For PSA, less is now more

April 14, 2014

Struggling French auto maker PSA Peugeot Citroen has announced plans to drastically decrease the number of models it wants to produce. It viewed the measure as a crucial step to enhance its attractiveness.

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PSA production unit
Image: picture-alliance/dpa

As French carmaker PSA tried hard to narrow down losses and secure new clients, its new Chief Executive Carlos Tavares said Monday the company aimed to reduce its model range to 26, down from 40 at present.

"We'll be focusing the creativity of our team on a lower number of models that our clients really want to buy," Tavares said in statement in Paris.

He said he expected the measure to also fuel the auto maker's sluggish business in Russia and Latin America and expand its China business.

Bumpy road ahead

Tavares said he expected the company to stop making losses in 2016, with a 2 percent yield forecast to materialize in 2018 from the core business of Europe's second-largest auto maker.

BPSA outlines deal with Dongfeng and Paris

Investors appeared unimpressed Monday, with PSA's shares down by 4 percent in the early trading hours.

Over the past two years, PSA had run up losses totaling more than 7 billion euros ($9.7 billion). The French state and PSA's Chinese business partner Dongfeng had recently obtained a 14 percent stake in the company each in a bid to help it stabilize.

As a first ray of hope, Peugeot has been able lately to sell more cars on its home market, but business in the eurozone and the wider European Union remains unsatisfactory with the debt crisis not over in many regions of the continent and economic recovery continuing at a slow pace.

hg/dr (dpa, Reuters)