Peugeot and Citroen slash to save

PSA, the group behind Peugeot and Citroen, has outlined plans to cut its model lineup by almost half and establish the DS range of cars as a separate prestige brand in a bid to return to profit.

That’s the decision of CEO and ex-Renault Nissan alliance heavy-hitter Carlos Tavares announced overnight. In reportage via Bloomberg and Automotive News Europe, Tavares is quoted as saying the French brands will return a two per cent operating margin on sales by 2018. This will more than double to five per cent in the 2019-2023 period, he says.

The return to profitability is based on a rationalisation of models to 26 from 45. Key focus will be expanding in markets outside Europe and the development of the DS range as a standalone brand.

The revitalisation will be funded in part by PSA’s new Chinese partner, Dongfeng Motor Corp. In addition, the French state and the Peugeot family will commit investment funds.

Of key interest is PSA’s plan for the DS range. Born of the current Citroen line-up, the DS brand, under Tavares plan, will get its own management team and will sell six distinct vehicles by 2022.

An "aggressive" push into China is also part of the plan.

"It’s not going to be a big-bang story,” ANE Europe reported Tavares as saying concerning plans for the DS line.

“It’s going to be: do the right cars. Once the right cars are highly appealing, show them to the appropriate investors. A premium brand is a matter of decades; it’s not a matter of years,” he said.

Tavares presented PSA’s Back in The Race operational plan overnight. It suggests the rationalised model line-up is key to a return to profit and to making the group more competitive in markets such as Russia and Latin America. Under the manifesto, PSA is also aiming to accelerate profits in partnership with Dongfeng and triple its China sales by 2020.

Citroen will be positioned as a “design-to-value” brand, with Peugeot to be defined as “high-end generalist”. Under the plan DS will be “an autonomous premium brand”.

The group’s model line-up will be trimmed to 37 by 2018 and to 26 by 2022. Citroen will have the most models (13) followed by Peugeot (seven) and DS (six).

Just two ‘native’ platforms will underpin the fleet. New hybrid and 4WD powertrains remain on the agenda.

Under the plan, Australian operations for the brands will be grouped under a new Asia and Pacific region. Almost 26 per cent growth is targeted for the region by 2022.

Currently Peugeot and Citroen are distributed locally by a division of multinational company Sime Darby. In 2013 Peugeot and Citroen sold just 4413 and 1180 units respectively. Both brands were down on their 2012 and 2011 totals.