PARIS - PSA/Peugeot-Citroen SA is adding or beefing up purchasing offices in emerging countries to reduce its components costs.
In the last two years, the French automaker has opened purchasing offices in Shanghai; Istanbul, Turkey; and Trnava, Slovakia, said purchasing manager Jean-Philippe Collin. It has expanded offices in Rio de Janeiro, Brazil, and Tehran, Iran, he added.
Purchasers in those countries buy goods for cars that PSA builds locally, but also for the group at large.
Components in low-cost countries are "between 5 and 10 percent" of PSA's annual supply bill of 29 billion euros ($35.25 billion at current exchange rates). Collin declined to say whether PSA would increase that proportion or set a specific target.
Of PSA's five foreign offices in charge of buying components for the automaker's use in other regions, the offices in central Europe, eastern Europe and Turkey have the largest budgets, Collin said. China and the South American trade bloc, which is known as Mercosur, have the smallest.
Customer demand for new cars in those regions is growing so fast that there is no capacity left to export parts to the rest of the world. And in China, high transportation costs hamper the competitiveness of local parts, Collin said.
PSA is urging suppliers to invest in China and the Mercosur region.
"We need to see production capacity and quality rise in those two parts of the world," Collin said.
In the Mercosur countries in particular, investments dwindled after economic upheavals beset the region at the start of the decade.