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NEWS
PSA Peugeot Citroen's monster loss year
A staggering $18 million a day lost by French manufacturers' parent during 2012The parent company of Peugeot and Citroen lost almost A$18 million (€13.7 million) a day in 2012 to record a net loss of A$6.5 billion (€5 billion).
To make matters even worse, PSA CEO Philippe Varin insisted the losses would have been far worse had the company not cut A$1.5 billion (€1.18 billion) in costs through the year or sold its Gefco trucking concern for €2 billion.
While much of the blame for the enormous loss falls at the feet of extraordinary write downs, there’s no masking that the company’s falling sales and over-dependence on the European market have both been damaging, resulting in company debt of €3.15 billion.
While PSA is still the second biggest seller of cars in Europe behind the Volkswagen Group, its sales fell 13 percent in 2012 to 1.47 million units. While a recession-hit European car market bled to the tune of eight per cent to 13.6 million cars, the PSA’s brands lost seven percent of their market share, down to 11.4 percent.
Peugeot and Citroen have been caught in a pincer movement between a depressed market and aggressive actions from Renault’s budget brand, Dacia, and the emerging Koreans, Hyundai and Kia. Unlike the Fiat Group, PSA cannot rely on profits from a North American arm to offset its European losses.
Mr Varin has implemented a turnaround plan, dubbed Rebound 2015, that aims to return PSA to profitability by 2015 through more cost cutting, eliminating more than 11,000 jobs, closing one major French factory and working closely with GM Europe in new model development.
Critically, Mr Varin also alluded to pushing greater differentiation between Peugeot and Citroen in both models and image.
“The foundations for our rebound have been laid. We are going to focus our investments, actively restore our profitability in Europe and reap the benefits from our investments in growing markets,” Mr Varin insisted in a statement.
Rebound 2015 calls for another €900 million in cuts in 2014, plus another €600 million in savings in vehicle development by teaming up with GM Europe.
Stung by Europe’s lower market, PSA is also aiming to sell 50 percent of its cars outside its home continent by 2015.
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Written byMichael Taylor
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