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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
Foto: TopicMedia SIFI rules leave Wall Street Goliaths wishing they were smaller RUBRIK HIER So, you think you are important? Boy, that’s gonna cost you Regulation of “systemically important financial institutions” (SIFIs) is taking shape, but its precise implications remain unclear. Experience in the United States has shown that banks must adapt their strategy ahead of the new rules to ensure that they have no undesirable side effects By Andreas Martin ” NO WAY ARE WE A SIFI!“ That’s the new refrain echoing down the corridors of the financial services industry. Hedge funds think they are much too small and insurance companies say they present no systemic risk unless there’s a global catastrophe. Asset managers claim they just look after customers’ money, and banks lobbied hard to ensure they didn’t end up on the list of institutions important enough to endanger the financial system if they fail. Elevation to a “systemically important financial institution” status is a dubious honor because it imposes stricter capital requirements. As of August 2011, the rules required the 28 most important institutions to set up an additional equity buffer of between 1 % and 2.5 % of risk-weighted assets by 2019. THINK ACT SEPTEMBER 2011 63
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