PSA/Peugeot-Citroen will boost European production by 10%

Article by Christian A., on April 27, 2015

Just a year after PSA/Peugeot-Citroen launched a major turnaround plan, it has announced a plan to raise production in Europe by 10% as the market recovers and the demand for its models become stronger. The restyled Peugeot 208 subcompact and newly launched Citroen C4 Cactus crossover are two of the models that have been in demand.

From May to August, PSA will increase its output by 60,000 units. There has been an increase in European registrations that may make the recovery targets cited by CEO Carlos Tavares appear too conservative in comparison. In March 2015, the automaker’s sales increased by 8.9% while the total market experienced an 11% gain.

The mid-market brands like Peugeot and Citroen seem to have gained better footing, doing better than the plain budget cars that did well even during the downturn. In a statement, PSA announced that all three of its brands (Peugeot, Citroen and DS) will increase their volumes. Over this period, the production of the C4 Cactus in Madrid will go up by 9,000 units more.

Other models that will also increase their output are the Peugeot 208, 2008 and 308, as well as the 308 SW version. The production in Poissy, France, of the DS 3 cars will also rise. Sales of the highly profitable delivery vans are also on the rise, prompting the increase in output of plants such as Sevelnord in northern France, where PSA has formed a night shift.

According to PSA manufacturing chief Denis Martin, the upturn hasn’t pushed the company to delay or stop plans to cut fixed costs and find ways to boost productivity. He said that the company won’t lose its head just because “Europe is back in volume growth.” He explained that volume doesn’t drive the results; rather, what affects it is the “structural action” that the company has been taking.

Due to losses for many years, a 3 billion euro ($3.2 billion) bailout was planned last year that led to the French government and China's Dongfeng acquiring 14% stakes in the automaker. PSA made a pledge under Tavares to go back to an operating margin of 2% by 2018. Analysts have applauded Tavares’ proposal while some in the industry criticized him.

The first group later claimed partial vindication when PSA was able to meet its cash-flow target four years early. Tavares’ "Back in the Race" plan includes strategies to reduce labor costs and inventory at PSA while dropping some models to concentrate on the more successful vehicles.

The increase in demand boosts the possibility that Tavares will have to upgrade his profitability goals shortly. When interviewed last Monday, Martin said that the company is working under the concept of a flat European market in 2015.

He added that if volumes are high, it may mean that it will be able to achieve its Back in the Race targets quicker than was forecasted.

If you liked the article, share on:

Comments

Recommended

Automakers that have teamed up with Formula 1, like Mercedes-AMG, develop the coolest road-going supercars just like the Project One. Aston Martin and Red Bull, on the other hand, have...
by - January 15, 2018
There is nothing more exciting happening this month than the 2018 Tokyo Auto Salon - especially with all the concepts that are being uncovered. Apart from the Toyota GR Super...
by - January 15, 2018
The very first time we ever saw Bentley’s SUV, the Bentayga, was back in September 2015 when it came out with the impressive W12 engine. A year after that, it...
by - January 15, 2018
For those who are expecting to see the mid-engine Chevrolet Corvette at the 2018 North American International Auto Show, we have got some bad news for you as it seems...
by - January 15, 2018
McLaren will be offering customers of its Sports Series models more choices when it comes to customizations. The automaker has also upgraded its range of options. Undoubtedly, customers are sure...
by - January 13, 2018
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries