Claude Satinet, Citroen's managing director and member of the triumvirate that runs PSA/Peugeot-Citroen, has presided over a spectacular revival of the brand.
Long considered the Cinderella within France's car groups, Citroen is now moving in sync with sister company Peugeot. Its sales rose 54 percent to 1.37 million units in 2003.
Satinet took the helm at Citroen in 1998. An engineer by training, the 60-year-old Satinet has spent almost all his professional life at the company, starting with the information technology department in 1973.
He worked his way up, with a four-year stint as managing director of Citroen Spain, a key market for the brand, before becoming sales director for Europe in 1992.
Things lately have been getting tougher for Citroen and Peugeot. The brands' main European market is sluggish and competitors from Japan and Korea are muscling into the region.
Plus markets such as China and eastern Europe are not as buoyant as they have been.
Satinet discussed Citroen's strategy to handle these issues and more with Automotive News Europe staff reporter Sylviane de Saint-Seine.
Why are Citroen's passenger car sales falling in western Europe?
It reflects our product cycle, with the phasing out of our Xsara lower-medium car and the restyling of the upper-medium C5. We are in the process of launching the C4, which replaces the Xsara, but it won't start boosting sales before December.
Why is the French market, which is your most profitable market, so weak?
Customers are morose. I don't think rising oil prices play a role. Oil has been rising in neighboring countries, too, and yet their new-car sales are not necessarily slow. I suspect it is because of high unemployment and taxes.
How does Citroen's profitability compare with Peugeot's?
We don't publish those figures, but I can tell you that, as a percentage of sales, we are now in the same ballpark as Peugeot. Five years ago, Peugeot was clearly more profitable than we were, but since then we've converged.
How is Citroen doing in the eastern European countries that joined the European Union in May?
New-car sales have been falling since May to an extent we had not anticipated. It seems that there was a rush by east Europeans to buy new cars before the EU accession deadline, perhaps because they anticipated prices to be increased.
Also, EU membership has lifted restrictions on the import of second-hand cars, so it's quite possible that that hurts new-car sales.
As far as we are concerned, we used to sell quite a lot of Xsaras in eastern Europe. So its absence is hurting.
What about China?
The market is not good. I would expect new-car sales in 2004 to be up about 20 percent compared with 2003, but they are slowing down quickly.
We at Citroen are losing market share and our unit sales in 2004 will be substantially lower than in 2003 [when they totaled 104,000 units].
The problem is that our lineup is aging. We sell updated derivatives of the ZX, which was developed 15 years ago. The Elysee, [Citroen's tailor-made car for China] is a cross between the ZX and the Xsara.
The most current model we sell in China is the Picasso, but sales remain marginal.
Chinese people are not used to minivans yet, or to hatchbacks for that matter.
Are you still making money in China?
Profitability is not what it used to be. We have had an operating margin of 10 percent in the past but that's no longer the case. I don't think we'll lose money this year, but we might in the future if we sit on our hands and do nothing about it. It cannot go on like this. We are reviewing the situation with our Dongfeng partner.
Are things going any better in Latin America?
We keep losing money, but not as much as before. We are going to announce new product launches.
As part of an effort to cut costs, Peugeot and Citroen have just announced they will quit the World Rally Championship at the end of 2005. Citroen has won the championship twice. Can you measure the impact of your WRC participation on your sales?
Not directly. But it did bring people into our showrooms who would not have passed the threshold otherwise. The impact has been greatest in France and Spain, where our two drivers came from. Basically. the WRC is too expensive.
How do you see the proportion of diesel-powered cars compared with gasoline models evolving in the coming years?
How this proportion evolves will depend on the Euro 5 rules [to cut particulate matter and NOx, pollutants that diesels emit in greater quantity than gasoline engines.] I have no idea how tough those rules will be when they come into force around 2010. If they are so stringent that they price diesel engines out of the market, then gasoline engines may stage a comeback. I don't know what the new EU Commission's position will be. The game is very open. Yet we need to know as soon as possible so we can make plans. Euro 4, which comes into force next year, has not led to a reduction in diesel sales as it was compatible with existing technology.
Would an efficient gasoline direct-injection technology cause a shift away from diesel?
Again, it depends on whether future EU anti-pollution rules make diesel unaffordable or not. If reducing CO2 emissions is the top priority, then gasoline cannot win. By nature, diesel uses less fuel and therefore releases less CO2.
Do European manufacturers stand united on the anti-pollution issue? Are German manufacturers, who export cars to California, as committed as you are to limit the scope of Euro 5? They have to comply anyway with tough anti-pollution laws in California.
There is no big divergence between PSA, Renault, Fiat and the Ford brand in Europe on the Euro 5 issue. But BMW and Mercedes have another approach. Volkswagen is multi-faceted.
As Skoda, it's on one side. As Audi, it stands on the other side. It is true a Californian customer who buys a 10-cylinder 300hp car for several tens of thousands of dollars can afford to pay for technical solutions [to make engines more environmentally friendly] that the small guy in a Paris suburb can't afford.
There is speculation in the press that PSA/Peugeot-Citroen might buy four-wheel-drive powertrains from Mitsubishi and in turn sell Mitsubishi diesel engines. Is that correct?
I haven't heard such a thing.
If PSA finally decides to build an SUV, will it be Citroen or Peugeot that sells it?
If it happens one day, it will be both. But it's not on the agenda.
EU rules to limit the impact of collisions on pedestrians are due next year. They will apply only to models launched after October 1, 2005. Why did you feel the need for the C4 to anticipate the pending pedestrian safety rules?
A car that won't meet pedestrian safety rules will have a marketing handicap, an image problem in three or four years.
That will be when Euro NCAP takes those rules into account to award its stars for safety. I would not like the C4 to miss sales because of that. Meeting pedestrian rules did not cost us much anyway. It did not affect the price, or the weight of the car. It's just a style matter.
How are your warranty costs evolving as a percentage of sales?
This is not a figure we publish. Quite predictably, they've risen since 2002 when our warranty period went from one year to two years.
Some UK customers are complaining their C3 Pluriel cabriolet cars are leaking. What is being done?
This happened in early Pluriels, but most of them have been fixed. I would add that Pluriels were not meant to be drenched in water by a battery of water jets.