It's been a great year for PSA/Peugeot-Citroen SA. Thanks to record performances by the Peugeot and Citroen brands, the French group has become the No. 2 seller of passenger cars in Western Europe behind Volkswagen Group.
PSA had a 12.9 percent market share through the first three quarters - up a full percentage point from a year earlier.
PSA clearly has benefited from improving economies in France and Spain, its two biggest markets. But the group's success also stems from an aggressive strategy initiated by CEO Jean-Martin Folz.
Since taking charge three years ago, Folz has pushed growth, profitability, product innovation and - above all - independence. PSA has rejected the industry's push to consolidate through mergers in favor of cooperative ventures, such as a joint diesel-engine program with Ford Motor Co. and a powertrain venture with archrival Renault SA.
Folz sat down with Stephane Farhi of Automotive News Europe on Oct. 13 in Paris to discuss his outlook for PSA and the industry.
For the first nine months of this year, new-car sales in Western Europe were down 1.5 percent to 11.6 million units. Germany, the region's biggest market, is in the middle of a slump. How do you explain PSA's growing sales?
Our growth in Europe is as strong this year as it was last year. We have brought new products and new technology to the market. We are also benefiting from the Peugeot 206 effect, and now we are introducing a coupe-convertible version of that car. In the countries where it has been launched, the 607 has started brilliantly.
Citroen is profiting from the Picasso compact minivan and the Xsara facelift, and equally from the very good performance of the Berlingo. The new HDI diesel engines have boosted sales right across our product range.
Regarding Germany, it remains the No. 1 car market in Europe. PSA has set up a strategy to expand in Germany. At the end of September we reached a 4.5 percent market share, up from 3 percent a year ago.
Carmakers' sales performances appear to be increasingly sensitive to the renewal of their product ranges. How do you cope with this issue?
PSA has two brands, Peugeot and Citroen. That's probably the lowest figure among the major carmaker groups at the moment. But it's an advantage to have two brands - although some people criticized us three years ago for this very reason.
It allows us to better manage a group product planning strategy because we can alternate new introductions in different market segments. We are also less sensitive to the impact caused by the renewal of a single model.
Since you took the top job at PSA, one of your main concerns has been to improve Citroen's brand image. You have instigated a new product policy, developed a bold concept-car strategy and hired a new chief designer, Jean-Pierre Ploue. When will this policy pay off?
Citroen is growing fast. Customers realize that the Citroen brand knows where it wants to go and has set targets. We took the risk of giving early previews to new cars that will be made eventually: the C3, C6 and Pluriel. It was our choice to unveil those future models during a period of time when some people were expressing doubts about the Citroen brand.
You said PSA will make 2.7 million vehicles in 2000. Will you reach 3 million in 2001?
We'll make 2.7 million units in 2000 for sure. I will talk about 2001 next February.
The first diesel engine to result from your cooperation with Ford will be launched in 2001. It's a 1.4-liter, direct-injection, common-rail unit. How are things going with Ford? What's your assessment of this cooperation?
Cooperation between independent carmakers in every field where production volume is significant is the right answer to globalization in the car industry. We are glad to have proved it once again with Ford.
Our cooperation includes four diesel-engine families. The first product is the small 1.4-liter engine. It will appear next year. The next chapter is about a second generation of 2.0-liter engines. The third phase is a V-6 engine, and the fourth deals with engines for commercial vehicles.
Development costs are shared 50-50 with Ford, while investments (capital expenditures) are split in proportion to the production volume each partner will use.
Could you set up a joint venture with Ford such as Francaise de Mecanique, the powertrain venture you have with Renault?
We considered that a joint venture (with Ford) was not necessary and that production would be achieved more easily by each partner in its own facilities.
PSA announced a new venture with Ford in telematics at September's Paris auto show. Do you plan to share other activities with Ford, including services such as credit or insurance?
This new telematics venture with Ford is of a limited extent compared with the diesel-engine project. Our purpose is to share our respective experiments. Our view is that the Internet world should not stay outside when you get into your car and close the door. We also want to promote standards in communication throughout the car industry.
With Vivendi (the French communications group) we have developed Internet services for car drivers. Last summer we set up a joint venture called Egery. Egery offers three different services: car safety and servicing; traffic information and navigation; tourism and general information. Peugeot and Citroen vehicles will start to provide such services as early as 2001.
What future do you see for your cooperation in powertrain with Renault?
Such a cooperation lasts as long as the related components last. If it appears that our interests and Renault's do not converge any longer, then we'll stop cooperating.
Renault's Louis Schweitzer and VW's Ferdinand Piech believe that a mainstream carmaker must be present in the heavy-truck business. Citroen withdrew from the truck business by selling Berliet to Renault's Saviem unit in 1974. Are you considering a return to the heavy-truck business?
PSA has no plans to return to the truck business.