Report suggests that Peugeot-Citroen must ‘urgently restructure’
12 September 2012

A French government report into the planned cuts at Peugeot-Citroen (PSA) has conceded that the ailing carmaker needs to ‘urgently restructure’ and recommends the company forges an international alliance with another carmaker.

The report had been commissioned by the incoming French president, Francois Hollande, who expressed initial opposition to PSA’s planned closure of the Aulnay facility and the shedding of more than 8000 jobs.

Report author Emmanuel Sartorius concludes that it is was ‘unfortunately’ not possible to challenge Peugeot-Citroen’s plans, especially as the small car plants were running at just 61 per cent capacity in 2011. However, he also questions why the company’s Madrid plant has not been targeted for restructuring.

Sartorius also heavily criticised the company’s strategy over the last two decades, especially its failure to develop an international sales footprint and said that spending £4.8bn on dividends and buying-back shares over the last decade had deprived PSA of vital funds. He noted that PSA is now trapped between the makers of high-value cars and the established premium brands.

Sartorius recommends that the best way forward for PSA over the medium-to-long term is forge an alliance with a global car-maker and that any cuts should not diminish the company’s research and development capabilities. PSA is working on an alliance with General Motor’s European arm, although reports suggest the talks have encountered hurdles.

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Comments
3

12 September 2012

Unfortunately for France, their market for small and medium sized cars, at the non-premium end, is competing with the Korean manufacturers.

Renault is better, being linked to Nissan.

PSA closed its plant in Coventry with the loss of thousands of jobs and transferred the work to Slovakia.

12 September 2012

It's terrible the competition with the Eastern Europe.

 

13 September 2012

The French govt. has wasted taxpayers' money in commissioning this report. It was obvious that PSA had to cut capacity. I'm not saying that PSA hasn't made strategic mistakes, but I'm sceptical that an alliance with another manufacturer would have prevented this closure and the problems PSA is facing today. Let's not forget that PSA has cooperated with other manufacturers on various programmes. When the report criticises PSA for paying dividends and doing share buybacks, this a complete red herring, and shows how much ignorance there is surrounding quoted companies.

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