ANNUAL REPORT / THE YEAR IN PICTURES - Alle jaarverslagen

CORPORATE GOVERNANCEMessage from the ChairmenPSA PEUGEOT CITROËN 2005 ANNUAL REPORT 6Thierry PeugeotJean-Martin FolzWith 3,390,000 vehicles sold worldwide,PSA Peugeot Citroën’s performance in 2005was shaped by stable unit sales (up 0.4%) andlower financial results. This was due to thecombination of several factors, including flatEuropean demand, more aggressive competition,sharply higher raw materials prices and thecost of compliance with the new Euro IV environmentalstandards. However, the year also sawa number of major successes, with increasedsales and improved margins outside WesternEurope, a further reduction in production costsand the development of the Peugeot and Citroënmodel lineups. This uneven performance led usto review our strategic choices and our answerwas clear: our strategy is the right one and thebest way to return to profitable growth is torigorously apply our policies and deploy themmore quickly.PSA Peugeot Citroën’s organization, as expressedin our signature, “One Group, Two Marques”,has been strengthened by the latest developmentsin 2005. The difference in Peugeot andCitroën’s growth during the year illustrates thebenefits of having two broadline marques thatcomplement each other, whose coexistencewithin the Group enables us to optimize modellifecycle management.The platform strategy, a core component ofour strategic vision, also made further progressin 2005. Following the introduction of thePeugeot 407 Coupé and the Citroën C6, theRennes plant now produces six different bodystyles on the same platform. Today, the numberof cars built on our three basic platforms isramping up very quickly as a percentage of totaloutput, attesting to the strategy’s success.The cooperation strategy was also activelypursued in 2005, which saw the introduction ofthe Peugeot 107 and Citroën C1 as part of ourcooperation with Toyota, and the signature oftwo new agreements – one with Fiat and Tofasto jointly develop and produce small entry-levelcommercial vehicles and the other withMitsubishi to manufacture new Peugeot andCitroën SUVs. We also presented the manufacturingdetails of our cooperation with BMW toproduce small, high-tech gasoline engines andunveiled the new diesel engine lineups developedwith Ford. These cooperative agreementsare having an increasingly favorable impact, andramp-up is proceeding as scheduled. By 2008,we expect to be producing more than 500,000vehicles and around 2,700,000 engines incooperation with other manufacturers.In 2005, we also reached an important milestonein our expansion outside WesternEurope, where, for the first time, sales toppedone million units, accounting for more than30% of total sales and revenue. Unit sales rose