Strategy and Ambition for 2010-2015
information supplied by: Peugeot South Africa
04 September 2007
2010: 4 million vehicles
Operating margin of 5.5 to 6%
No. 1 in environmentally friendly cars
Beyond 2010: The most competitive carmaker in Europe
Operating margin of 6 to 7%
Christian Streiff, Chairman of PSA Peugeot Citroën, today unveiled the Group’s strategy and ambition for 2010-2015. For 2010, PSA Peugeot Citroën has set goals of restoring growth and profitability, selling more than four million vehicles and consolidating its leadership in environmentally friendly cars. For 2015, the Group is committed to being the most competitive carmaker in Europe. Its goal is to have an operating margin of 5.5 to 6% in 2010 and 6 to 7% by 2015.
In 2015, PSA Peugeot Citroën intends to be solidly positioned in Europe, steadily growing and profitable, with extensive operations in other global markets and ranking among the leaders in each of its businesses. Faurecia aims to be among the worldwide leaders in each of its activities, Gefco expects to become the European leader in automotive logistics and Banque PSA Finance is determined to remain the benchmark in profitability.
Christian Streiff defined the CAP 2010 and Ambition 2015 objectives for the Automobile Division:
A strong improvement in product and service quality. The challenge is to reduce the number of quality incidents by half and to shorten incident resolution times by two-thirds. In terms of service quality, the goal is for Peugeot and Citroën to rank among the European Top 5.
A European product offensive signalling Peugeot’s powerful comeback and Citroën’s acceleration. This challenge involves enhancing both brands’ lineups by strengthening their positions in growth segments, boosting the Group’s leadership in light commercial vehicles and developing a “competitive premium” model in each segment. In all, 29 product launches are planned in Europe between 2007-2010 with differentiated models for each brand in order to improve market coverage significantly. A further objective is to maintain the average age of the lineup at 3 years, compared with 4.5 years in 2006.
A European marketing offensive. This will enable the Group to sell 300,000 additional units in 2010, thanks to a specific strategy for the fleet market, specific actions in the dealerships to support the product offensive, a greater return on media spend and proprietary dealerships turned into real profit centres.
A cost-cutting program in order to reduce warranty costs by half, increase purchasing productivity from 4 to 6% a year, reduce overheads and fixed costs by 30%, shorten development cycles by 30%, reduce supply chain costs by 10%, fully roll out the industrial efficiency “Convergence” program by the end of 2007 and increase capacity utilisation by 20 points.
Highly competitive manufacturing facilities, with the implementation of the PSA Production System, the development of flexible and modular platforms, an extension of the manufacturing and sourcing base in emerging markets and an increase in post-production vehicle customisation.
An international offensive intended to sell an additional 400,000 vehicles outside Europe in 2010.
o In Mercosur, the Group plans to gradually double its sales to 400,000 vehicles. In Brazil, the objective is to join the “Big 4” auto industry leaders. To achieve this goal, PSA Peugeot Citroën will launch 12 new models, become a player in the entry-level segment, strengthen and extend the two brands’ dealer networks, swiftly free up additional production capacity, increase local content and strengthen R&D in the region.
o In China, the Group’s ambition for 2015 is to become an established, profitable industry player with sales increasing to one million units. To do so, it plans to start up new manufacturing facilities with its partner Dongfeng Motor by 2010, while renewing the Peugeot and Citroën lineups and launching 12 new models. A feasibility study has also been launched for a joint venture with Chinese carmaker Hafei, which would provide the Group with a third plant in the South. At the same time, the China Business Unit intends to develop R&D and styling centres and strengthen purchasing.
o In Russia, PSA Peugeot Citroën has set an objective of 100,000 vehicles in 2010, and to increase sales rapidly to 300,000 units.
Overall, the product strategy will enable both brands—in all markets—to strengthen their presence in growth segments (especially in non-sedan lineups), to offer “competitive premium” models in each segment and to provide a competitive response when necessary in the entry-level segment. In total, worldwide, 53 new models will be launched in 4 years, from 2007 to 2010.
Lastly, the Group wants to strengthen its leadership in environmentally friendly cars. The objective is to reduce its average CO2 emissions in Europe by at least 10g/km. This will involve gearing up R&D on engines and extensively rolling out hybrid technologies, with the launch of HDi hybrids in 2010 and sales of one million Stop & Start units from 2011. Engines that run on 30% biodiesel will be widely available across the lineups and a bioethanol offer will be introduced, matching the demand of each country.
After a four-year decline in margins, the higher volumes and lower costs generated by CAP 2010 will drive a sustainable recovery in the Group operating margin, which is expected to reach 5.5 to 6% in 2010 then improve to achieve 6 to 7% over the 2010- 2015 period.
This strategic plan will make PSA Peugeot Citroën the most competitive carmaker in Europe, steadily growing and profitable, with significant international development, open to opportunities of strengthening and of creating shareholder value.