Peugeot-Citroën battles to curb losses

July 18, 2012: Loss-making PSA Peugeot-Citroën intends to halt production at its Aulnay plant near Paris and cut more than 5,000 jobs across its French production sites. The French company’s automotive division is expected to report an operating loss of about £550 million (Rs 4,725 crore) for the first half of 2012.

Capacity utilisation in the Group’s European plants fell to an average 76 percent in first-half 2012 from 86 percent in 2011(2). This rate is even lower in the small car segment, which accounts for 42 percent of PSA Peugeot-Citroën sales and where most of the competing models are made in low-cost countries.

Last week PSA Peugeot- Citroën chairman Phillipe Varin presented a plan that involves the closure of the Aulnay plant in 2014, which currently employs around 3,000 people, and builds the Citroën C3. Production of the C3 would switch to nearby Poissy.

PSA’s plan also proposes a reduction of 3,600 jobs across its French facilities.A further 1,400 jobs would be cut at Rennes, where the Peugeot 408, Citroën C5 and Citroën C6 are constructed.

PSA hopes the plan, if adopted, will enable it to break even by the end of 2014. Nevertheless, the downturn in PSA’s fortunes and the current and short-term weak projection for European markets will have an impact on its India project.

PSA Peugeot Citroën announced plans to roll out its first made-in-India car in 2014 from the Sanand plant with the premium 508 saloon being the first product. The plant has a planned capacity of 170,000 cars. Chairman Varin had signed an agreement with Narendra Modi, chief minister of Gujarat, on September 1 last year.