THINK ACT

ACT: PEUGEOT
“It has to translate into
pricing power rather than to
be the champion of rebates”
Peugeot iOn electric cars, and we’ll
have the world premiere of our Peugeot
3008 HYbrid4 diesel this year.
Success is coming.
What’s your sales outlook for the
European and global markets?
In 2011, the market in Europe should
be flat compared with 2010. That
is not great news, but last year was
better than expected because we
thought the market would be down
by 10 % and it was down by only
5 %. The situation will continue to
improve in the United States with
its significant growth of 10 %. China
grew strongly in 2010 and should
achieve percentage growth in the
low teens in 2011. Latin America
will grow by the high single digits
this year and Russia also will grow
substantially. In summary, flat in
Europe and growth everywhere else.
What about the 2011 prognosis for
the Group?
We took market share in Europe last
year. We were helped by incentives
that encouraged people to buy small
cars. It will be more difficult this year
because those incentives have come
to an end in the French market, so
there will be more focus on prices.
We want to scale-up our two brands
when it comes to pricing power. I
won’t give market share targets for
2011, however, we are introducing a
number of new models this year; we
want to optimize our profitability
and get the best value that we can.
We expect recurring operating profit
from our automotive division to
improve from last year, assisted by
a contribution of more than EUR
1 bn from our performance plan.
The terrible events in Japan have
caused us some difficulties in getting
shipments of electronic components,
and we estimate this will have a
negative impact of about EUR 150 m
in the first half of the year. Obviously,
we’ll continue to track the situation
very carefully.
Ford is following a similar strategy
of trying to avoid incentives to
maintain profitability. Is this
something that should be important
for all automakers?
What I can say is that it’s especially
important for us because our vision
is to be a step ahead and to create
value. Being a step ahead is not just
a nice catchphrase, it has to translate
into pricing power rather than
being the champion of rebates. I’m
confident in our ability to improve
our pricing power thanks to the
successful upscaling of both of our
brands. We now have the premium
Citroën DS line, made up of the DS3
with the DS4 and DS5 coming soon.
There are no rebates on the DS3,
and there will be none on the other
DS cars. Meanwhile at Peugeot we’re
developing models, such as the RCZ,
that command premium prices. At
the end of the day, we have to stick to
this approach very strongly.
Do you need more alliances?
We have so much value to create by
leveraging the Group’s potential. We
sold 3.6 million vehicles last year
and we’ll continue to grow this year.
Obviously it would be great to have
a higher scale, but there is much
more to gain immediately if we roll
out the full modular approach in our
components. This means that the
cars in the model range will have
fewer unique components, so that
the Group can order much larger
quantities of common parts, which
is more cost-efficient for PSA and
simpler for the component suppliers.
There’s a lot we can do personally to
remain a robust stand-alone business.
At the same time, there is no doubt
that we have to deepen our strategic
partnerships to achieve the step ahead
that we desire, such as CO 2 reductions.
We want to be in electric cars,
hybrids and conventional combustion
engines, and with our scale, involvement
in all of these areas requires
us to have partnerships. We have a
partnership with BMW in which we
work on gasoline engines and we’ve
now set up a promising joint venture
based on the components of the hybrid
technology. We have cooperation
with Ford on diesel vehicles and with
Mitsubishi on electric cars. We want
to create value, so we have to adjust
our allocation of capital to put it
where it will maximize returns, which
means cooperation is key. Of course, if
there are opportunities to make alliances
that make real sense and bring
long-term synergies, we’re open to
them. But let’s be pragmatic, it’s not
necessary today.
62 THINK ACT SEPTEMBER 2011