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Wednesday, 9 October, 2002, 05:44 GMT 06:44 UK
French car maker takes on the world
Citroen C3 Pluriel

One of the head-turners at the Paris Motor Show - which is expected to have attracted 1.5 million visitors by the time it ends on Sunday - is a home-grown creation, the Citroen C3 Pluriel.

The big question for PSA is still that of global reach
"It's only one car, but you can look at it as five cars," Citroen chief executive Claude Satinet told BBC News Online, referring to the car's 'cabrio-into-pick-up' features.

The car, which will hit the street next spring, also marks the return of Citroen - and its parent PSA Peugeot Citroen - from the brink, with soaring sales pushing its net income up 29% during 2001 to 1,7bn euros (1bn; $1.7bn)

For PSA it has been a dramatic turn-around from just four years ago when the word was that the French car maker was too small to survive on its own.

Independence secured

Now it appears PSA's struggle to remain independent in the face of the late 1990s obsession with takeovers and mergers is over.

PSA remains independent.

And given its track record over the last few years, its position is firmly cemented.

"Since 1998, our sales have increased by 54%," the group's chief executive Jean-Marie Folz told BBC World Business Report.

"We've increased our market share in all European countries and we've also doubled our sales outside Western Europe."

Working together

But beyond its own performance, PSA has also been saved by changes within the automotive industry.

Peugeot 307
Many Peugeots and Citroens share components with other cars
In a marked change from the late 1990s in-vogue consolidation wave, executives now appear more keen to shake hands than to don boxing gloves.

PSA has taken advantage of this by entering into joint ventures with Toyota, to build a small car in the Czech Republic, with Fiat, to build people carriers and commercial vehicles in France and Italy, and with BMW to develop new engines.

At home in France, PSA is working with Electricite de France to develop electric and hybrid cars.

The company is even developing satellite navigation systems together with its competitor Renault and its partner Nissan, as well as with Ford.

"It doesn't mean that people will be complacent of each other. We're still competitors, and competing heavily," Mr Carlos Ghosn, chief executive of Nissan and heir to the top job at Renault, told BBC News Online.

"But at the same time we are business people. That means when an agreement makes sense it has to be done".

More deals

The trend is set to continue, Mr Ghosn predicted.

30% of our sales are in France

Claude Satinet
Chief executive
"There's going to be a lot of exchanges in the car industry.

"There's going to be even more cooperation.

"You're going to have more specific agreements, you're going to have more specific alliances on technologies - or on geographical base."

Global footprint

The point about global reach is contentious for PSA due to the French car makers' reliance on the French market where, together, they command a 60% market share.

"The big question for PSA is still that of global reach," observed the automotive sector analysts

"It has made investments in South America and China, but has a low share in South East Asia and Eastern Europe and remains absent from North America."

PSA is well aware of its weakness in the global markets.

At the moment, about "30% of our sales are in France", said Citroen's Mr Satinet.

But he went on to insist that the proportion of total sales made up for by French customers is shrinking.

"We are growing outside [France]. It is much better," he said.

Brand management

But with virtually all cars from different automakers being made up from shared components, and at a time when the car bodies have been shaped by universal wind tunnels, growth in the global markets must be driven by the wielding large marketing budgets.

"Everything being more or less equal, then, the industry's battleground of the future will revolve around brands," observed

The question for PSA is: does it have the means to transform itself into a truly global player?

And supplementary to brand-building, efficient distribution networks will be key.

And it is in this area that many observers say PSA should make more from its relationship with other car makers, such as Toyota.

Cars and strategies

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