ANNUAL REPORT / THE YEAR IN PICTURES - Alle jaarverslagen

7sharply in South America and China, driving aclear improvement in financial performance. Thisgrowth dynamic is set to continue, led by theintroduction of a large number of new modelstailored to local demand.The demonstrated effectiveness and expectedfuture benefits of our strategic vision mean thatwe can confirm our two main objectives: toincrease unit sales to four million cars andachieve a consolidated operating margin of 6% ofsales and revenue. Although business conditionshave prevented us from reaching our objectivesfor the time being, we are still committed tomeeting these objectives as quickly as possible,in particular by implementing assertive action plansin several key areas of our automobile business.The first pathway to improvement is to meetstringent quality standards. Significant progresshas already been made following the deploymentof a broad-based improvement plan acrossthe organization, from project development andpurchasing to manufacturing and customerservice. We are committed to being one of thetop European carmakers in terms of quality.The second priority is to improve our competitivenessby substantially reducing our productioncosts, by around €600 million a year. Weexpect to maintain this pace of annual costsavings in the future, thanks to the full impact ofour platform and cooperation strategies, theramp-up of the internal improvement plans designedto create a unified production system and thewider application of new purchasing policies.The third pathway is our innovation strategy,an invaluable source of competitive advantage.It is guided by our commitment to developinguseful technologies that improve safety andenvironmental performance, and can be deployedfor the largest number of customers.That’s why, after introducing cars equipped withStop & Start, a first-stage hybrid system, weare now preparing a development programaimed at bringing a lineup of hybrid diesels tomarket by 2010. The first two demonstratorsof that technology – the Peugeot 307 andCitroën C4 Hybrid HDi – illustrate our vision ofthe car of the future and our dedication to developingclean, fuel-efficient powertrains. Our innovationstrategy is also designed to providecustomers with the very best safety technologythat protects all road users. Eight of ournew models, for example, have earned fivestarratings in EuroNCAP tests.Lastly, the model renewal process is wellunder way, providing the primary driver of ourfuture growth. After peaking at 4.5 years in 2005,the average age of Peugeot and Citroën modellineups is now steadily declining, to a projected3.3 years in 2008.In this renewal process, the first-half introductionsof the Peugeot 207 and Citroën C6 are thebig news for now, but they will be followed byother major launches during the year both in andoutside Western Europe. Together, they willagain demonstrate our ability to innovate anddiversify our model portfolio, which will include38 body styles in 2006 versus 28 in 2001.These new model launches will have a positiveimpact in 2006, but the business environment isexpected to remain unfavorable, with persistentlyaggressive competition and flat demandin Europe. In this environment, we estimate thatoperating margin should be in the neighborhoodof the second-half 2005 figure in first-half 2006,before showing an improvement in the secondsix months of the year.Thierry PeugeotJean-Martin Folz