PSA/Peugeot-Citroen, with Chinese partner Dongfeng Motor Corp. has recently opened its third assembly site in China. The site, located in Wuhan in Hubei province, is slated to build the Citroen C-Elysee and Peugeot 301 sedans and is expected to increase PSA’s annual capacity by two-thirds to 750,000 units by the end of 2015.
PSA’s expansion in China runs counter to its strategy at its home country France, where the carmaker is eyeing to implement a site closure and a number of job cuts. PSA built around 40 percent of its vehicles in France in 2012 and posted EUR576 million ($750 million) in operating losses. The French carmaker is currently implementing restructuring plan that calls for a closure of a factory just outside Paris and sending home around 11,200 workers across the country.
According to Klaus Paur, global head of automotive at industry researcher Ipsos, China is “probably the only way” for PSA to get out of its difficulties in Europe. He noted that PSA's continued dependence on Europe has "amplified" its problems.
Vehicle sales in Europe dropped to a 20-year low in May 2013 as the current economic crisis in the region continued to discourage consumers to acquire expensive products like cars. Political leaders in Europe are looking for ways to resurrect an economy that is being pulled down by the sovereign-debt crisis, as unemployment in 17 Euro countries soared to 12.2 percent in April 2012.
On the other hand, PSA continues to gain in China, posting a 32-percent growth in sales to 232,960 units in the first five months of 2013, and even outpaced the 15-percent growth in industry passenger-vehicle deliveries, data from the company and the China Association of Automobile Manufacturers show. [source: automotive news - sub. required]