Peugeot Citroen slashes model range to aid recovery

Peugeot Citroen is scrapping more than half its model range in an effort to accelerate recovery after a rescue deal backed by the French Government and China’s Dongfeng Motor Group.

Carlos Tavares, new chief executive parachuted in from Renault to spearhead the overhaul, is reducing the model line-up from 45 to 26 over the next four years and stepping up development of the DS range to a premium brand.

He has set his sights on reversing losses in Europe and emerging markets, cutting capacity and is looking for a 2pc operating margin by 2018 and 5pc by 2023.

The new model line-up will heavily focused on the development of plug-in hybrid vehicles, four wheel powertrains and self-driving cars but investment will be cut from 8pc-10pc of sales to 7pc-8pc.

Mr Tavares said: “We are going to focus the creative power of our teams on a more limited range of products that people want to buy,”

Family controlled Peugeot piled up losses of more than €7.3bn (£6bn) in two years, damaged by over capacity and falling sales in a tough European market and heavy dependance on the home mrket.

The French Government and Dongfen came to the rescue, providing a cash injection of €3bn and each taking a 14pc stake in the ailing business.

The recovery plan involves tripling exports to China and driving for faster growth with Dongfeng in the Asian market. Peugeot Citroen is also aiming to achieve a turnaround in Russia and transforming the business model in Latin America with the object of returning to profits in the two regions in the next three years.

Mr Tavares said the recovery plan was well under way but the group needed a profit driven culture and a global approach to return to profit more quickly.

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