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.