PARIS (AP-CP) _ French auto company PSA Peugeot-Citroen plans to
cut costs _ and up to 8,000 jobs in Europe _ and focus on selling
cars in emerging markets in an effort to improve profitability.
The job cuts, disclosed Tuesday, would represent nearly 12 per
cent of its European work force.
Europe's second-largest carmaker has suffered four years of
sliding profitability, because sales failed to meet expectations
earlier in the decade and chronic overcapacity.
The plan drawn up by chief executive Christian Streiff sets a
target for boosting its operating margin to between 5.5 per cent and
six per cent by 2010, compared with 2.7 per cent in the first half
of this year.
Profitability is slated to continue improving, reaching between
six per cent and seven per cent between 2010 and 2015.
Streiff said the cost-cutting plan would include a hiring freeze
in Europe, where labour costs are highest. That would cut the
European work force by up to 8,000 jobs, mainly through early
retirement and voluntary departures.
Peugeot-Citroen employes about 211,000 people worldwide,
including 68,000 in Europe.
It also intends to cut in half the cost of guarantee claims,
improve the productivity of its purchasing, reduce fixed costs and
development costs, cut logistics costs, and improve capacity
The cuts reflect restructuring among most of the world's
carmakers as they deal with global overcapacity, loss of market
share to Japanese companies and changes in market demand caused by
rising gasoline prices. In North America, the Big Three carmakers _
General Motors, Ford and Chrysler _ have cut thousands of jobs in
the United States and Canada, including 1,200 announced just last
week at at a GM truck plant in Oshawa, Ont., just east of Toronto.
In Canada, Ontario has been hit hard by the loss of Big Three
auto industry jobs, although Japanese carmakers Toyota and Honda
have expanded their assembly factories in the province to supply
growing U.S. demand for their vehicles.
While Peugeot-Citroen has previoulsy said it didn't believe in
producing low-cost cars specifically aimed at emerging markets,
Streiff indicated Tuesday that this may be changing. The company is
working on ``entry level'' models targeted at China, Russia and
South America, he said.
The company is targeting sales of four million vehicles a year by
2010, compared to 3.37 million in 2006, fueled by a major effort to
rejuvenate its model lineup.
The company is looking to boost sales outside the mature European
market. It plans to double its sales in Latin America to 400,000 a
year. It is targeting one million annual sales in China by 2015 and
plans to build a new plant there with its local partner Dongfeng
Motor in 2010.
A joint venture with another local partner, Hafei, is under way
and should lead to the construction of a third manufacturing
facility in southern China, the company said.
In Russia, Peugeot-Citroen is targeting sales of 100,000 by 2010.
In western Europe, where Peugeot-Citroen sells the bulk of its cars,
the company plans to sell 300,000 more cars annually by 2010.
It plans to launch vehicles powered by hybrid diesel engines in
2010 and equip all products with Stop & Start systems that reduce
emissions and fuel consumption by stopping a car's engine when it is