Analysts say PSA/Peugeot-Citroen faces rough times, could recover this year

Article by Christian A., on May 18, 2012

Analysts are saying that General Motors' new alliance partner PSA/Peugeot-Citroen is facing rough times, but could achieve a turnaround as early as 2012.  Deutsche Bank analyst Gaetan Toulemonde told Automotive News Europe that the automaker is "not out of the woods," but clarifying that the situation is not "as desperate as some people might think."

He further stated that he anticipated the cash burn to be "much more manageable and more limited" starting the second half of the year and into next year. The comments of Toulemonde were echoed by investment bankers Morgan Stanley, which said that the hardships of PSA will peak by the summer and recover later in the year when many of the automaker's efforts to increase cash and lower costs take effect. 

According to PSA, improvements in its balance sheet are anticipated in the second half of the year, thanks to the recent introduction of key model Peugeot 208 subcompact in Europe as well as a new Citroen DS model in China and the Peugeot 308 in South America. Peugeot hopes to achieve worldwide sales of 550,000 units of the 208 next year, including 420,000 in Europe. 

A PSA spokesperson stated that their cost-cutting program, growth in markets like Brazil, China and Argentina, as well as new model launches will "pay off this year."

The automaker's alliance with GM will not help the French company in the immediate future. The companies are targeting to annual savings of more than $2 billion for the next five years, split around equally between the partners. By 2016, the results of their efforts to share logistics and purchasing as well as to manufacture automobiles on shared vehicle platforms will begin to be seen.

Topics: psa, peugeot, citroen

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