PSA seeks sale recovery
(Shenzhen Daily/Agencies)
Updated: 2005-04-29 14:29

PSA Peugeot Citroen, Europe's second-biggest carmaker, is on course to recover from last year's sales drop in China after a 44-percent first-quarter upturn spurred by price cuts and new models.

But executive committee member Robert Peugeot said France's PSA, which had just 4 percent of the world's third-largest vehicle arena, intended to slow its original plan to double capacity by the second half of 2006 as the market is decelerating.

Despite pegging China as a major area for growth to help it offset a saturated European market, PSA saw sales in the country slide 13 percent last year to 90,000 units, hit by a credit tightening that hit easy car loans.

Peugeot said the company aimed to sell 115,000 vehicles this year, even as it rethought a 600 million euro (US$780 million) plan to double capacity at its main Chinese plant.

PSA is off to a solid start, posting a 44 percent sales rise in the first quarter of 33,000 Peugeot and Citroen cars in China. China accounted for just under 3 percent of its global sales of 3.38 million units last year.

Peugeot attributed gains to cuts in prices and the launch of new and remodelled products, but warned that margins were still being squeezed by high supplier costs.

PSA's main joint venture with China's Dongfeng Motor lost 500 million yuan (US$60.42 million) last year, Chinese media said earlier this year. But executives would not confirm this number.

PSA's original China investment plan called for doubling of production by the second half of 2006 to 300,000 cars. It plans to introduce two new cars to China every year from 2006.

While Peugeot said the investment figure stood, the company was rethinking the rate at which new capacity would come on line.

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