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Peugeot: First the world, then the U.S.

The likelihood of France's Peugeot Group re-entering the U.S. market after a decade-long absence depends on the answer to two questions:

Can the French automaker maintain the sales growth it is seeing in Europe and other markets worldwide?

And if so, will it want to divert enough cars to mount a U.S. sales initiative?

PSA/Peugeot Citroen SA says it will decide whether to return to U.S. retailing after 2004. That is the end of the automaker's current global business plan.

According to that plan, PSA expects to reach a worldwide sales volume of 3.5 million vehicles. That would translate to 700,000 more vehicles than the automaker sold last year.

"Our biggest concern at the moment is the European market outside of France," said Frederic Saint-Geours, Automobiles Peugeot managing director, in a private discussion last week at the Frankfurt auto show.

"Although sales in those European markets are growing, they are not growing as fast as in France." For the first half of this year, for example, while PSA sales in France ticked up nearly 7 percent, sales in Germany were flat while sales in the United Kingdom rose a modest 4.3 percent.

But it is Peugeot's outlook on new markets that is triggering the conversation of a U.S. entry. Sales outside Europe are running more than 20 percent higher than last year. Peugeot has been a small player in Latin America, Asia and other markets. The company is ramping up a retail network in Mexico.

"We have a plan through 2004 to reach our goals with our present selection of models," Saint-Geours said.

"We want to expand our business in China, Iran, South America and Mexico. It will be only when we have done so that we will begin to look beyond our existing markets and make the decision on the United States."

Saint-Geours said Peugeot has not decided what models might be offered to U.S. consumers. "By 2005," he said, "there will be new models."

Under the world plan, 85 percent of Peugeot's sales will come from three platforms - the new 307, sized to compete against the Ford Focus; the 206, which shares a class with the Ford Fiesta and the Opel Corsa from General Motors; and the 106 minicar.

There are no plans to introduce a light-duty truck and no plans for any alliance with other automakers, such as French competitor Renault's pairing with Nissan Motor Co.

You can reach Lindsay Chappell at lchappell@crain.com

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