PARIS - PSA/Peugeot-Citroen SA will launch 25 models between 2001 and 2004 - nearly three times as many as in the previous three years.
'The trend is not toward a small number of world cars that would last a very long time,' said PSA Chairman Jean-Martin Folz.
PSA plans to produce enough models to cover 'more than 90 percent' of the Western European market. That compares with some 80 percent in 1998, just after Folz took PSA's helm. Peugeot and Citroen combined had 30 models in 1997. They will have 37 by 2004.
Folz declined to identify the new segments for PSA. However, he said that this year PSA will launch a minivan and before 2004 it will start production of hybrid cars and fuel-efficient vehicles with low emissions ratings.
Looking for increase
Altogether, PSA plans to sell 3.5 million cars by 2004. That is a 17 percent increase over the 2.8 million cars sold in 2000. In the three years before that, PSA's sales grew 34 percent, making it the world's sixth-largest carmaker and accounting for more than 5 percent of the global market.
PSA aims to sell 3 million cars this year.
The new models will help PSA raise its market share in Germany, where it has been lagging, Folz said. His goal is to have 6.5 percent of the German market in 2004 vs. 4.5 percent in 2000. Folz said this will be achieved because of a more comprehensive model lineup and restructuring of the dealership network, to be reinforced in large cities.
Only Volkswagen has a larger market share than PSA in Western Europe. PSA's share last year was 13.7 percent. It had a 22 percent share in Spain and a 32 percent share in France. For 2004, Folz wants a market share in all countries except Germany of at least 10 percent. In Italy, for example, PSA had only 7.4 percent last year.
Outside Western Europe, PSA plans to sell 800,000 cars in 2004, up 67 percent from the 480,000 it sold in 2000. Big increases are expected in Brazil, where Folz dedicated a plant Feb. 1.
As part of its cost-reduction effort, PSA aims to build 85 percent of its vehicles on three platforms, compared with 50 percent in 2001. Folz acknowledged this proportion in 2001 was smaller than the goal set in 1998, but he said it was 'because of the success of the models built outside those platforms.'
Folz said PSA would develop 51 systems, such as powertrains, air conditioning, seat frames and brakes, that can be used on several platforms. Such systems will represent 30 percent of production costs in 2004.
PSA also wants to boost its production of common-rail direct-injection diesel engines, so that they account for 50 percent of group sales in 2004, compared with 26 percent in 2000 and 32 percent in 2001.
Despite all the planned launches, PSA says it will not increase its capital expenditure significantly. It will spend $2.8 billion in new investment in 2004, compared with $2.7 billion in 2000. That will leave PSA awash with cash, and some of it will return to shareholders in the shape of share buy-backs. Already in 2000, PSA bought back some $734.1 million in shares and bonds convertible into shares.
Folz appeared to rule out any significant acquisition for the next three years, saying the 'objective remains organic growth within the group.'
At the end of 2000, PSA's excess cash represented $1.3 billion, reflecting the company's healthy profits.
In line with analysts' expectations, the company made an operational profit of $1.9 billion, or 4.8 percent of sales, compared with an operating margin of 4.4 percent in 1999. Folz said he wants to boost the profitability of the automobile division and take its operating margin from 4.2 percent in 2000 to 4.8 percent in 2001 and 6 percent by an unspecified date.
Folz said he was confident the European car market would hold up, in spite of some economists' fears of an economic slowdown in the region as a side effect of weaker growth in the United States.
'We don't see any prospect for a sharp downturn in the European market,' he said. 'I see the market being stable.'