PSA Peugeot-Citroën's Global Sales Dip in 2011

PSA Peugeot-Citroën has announced its global light-vehicle sales for 2011 which have shown that sales have seen a dip compared to that achieved in 2010. Total sales including completely knocked-down (CKD) kits declined by 1.5% y/y to 3.549 million units compared to 3.602 million units achieved a year ago. Peugeot sales slid by 1.3% y/y to 2.114 million units, with the Citroën brand following suit with a decline of 1.7% y/y to 1.436 million units. When taking into account purely fully built vehicles, there was a global sales decline of 1.1% y/y to 3.092 million units, with Peugeot sales falling by 0.8% y/y to 1.656 million and Citroën by 1.3% y/y to 1.436 million.

From a regional perspective, the only one of the group's markets to decline has been Europe, where its sales have slid by 6.1% y/y to 2.060 million units. In this region, Peugeot sales fell by 6.2% y/y to 1.099 million units, while Citroën's were down by a similar 6.1% y/y at 961,156 units. PSA said that it was dragged down by lower sales in the B segment during the year, as a result of the impending replacement for the Peugeot 207. However, it also had to contend with the elimination of scrapping incentives in some markets, and most notably its domestic market.

However, the situation is far brighter outside Europe. China continues to lead the way in its international markets, with PSA sales breaking through the 400,000-unit barrier for the first time with an increase of 7.7% y/y to 404,437 units, a gain that both brands contributed to. This looks set to be a gain that surpasses the level for the passenger car market as a whole here, and has been helped by the launch of new models such as the Peugeot 308 and 508. Sales in the Latin American market have increased by 10.7% y/y to 325,773 units, surpassing the 300,000-unit level for the first time. This rate growth was achieved despite a sharp slowdown in Brazil in the second half of the year, and was slightly above the market rate for the region, as the automaker widened its product offering here. Russia also offered further cheer as its sales increased by 34.8% y/y to 74,817 units, as it took full benefit of the opportunities offered by its production site in the country which was opened in the past couple of years. The improvement has also come despite the withdrawal of the scrapping incentive in the country at mid-year. Finally, in its remaining world markets, PSA achieved a gain of 10.6% y/y to 226,153 units.

Outlook and Implications

The combination of a retreat in European sales and the further improvement in registrations in international markets has brought a further reduction in the market share of Europe, traditionally its dominant market. Over the past 12 months, sales outside Europe have made up 42.0% of PSA's total sales, including CKD kits, compared with 39.1% during the same period of 2010, and 33.1% in 2009. As noted, this has been driven by growth in all its markets, although the automaker is not planning to stop there. Indeed, despite the slowdown in the rate of growth in China during the past year due to cooling demand and the sheer volume of sales during the previous two years, PSA is aiming for China to continue to lead this charge. This will be supported by the further expansion of its joint venture (JV) with Dongfeng, which has been joined by a second JV with Changan. The combination of the two JVs is anticipated to give PSA a passenger car market share of around 8% by 2015. It will continue to make inroads in the Latin American market, having announced further investment in October 2011. This will amount to 575 million Brazilian reais (USD318.8 million) per year between 2012 and 2015 in order to double vehicle production in the country to 300,000 units per annum (upa). It will also unveil eight new models for sale in the country during this timeframe, as well as increasing the number of sales outlets from 320 to 480. PSA also finally announced that it would enter the Indian market during the Q1 2011, and it announced later that it is investing 40 billion rupees (USD760.3 million) in the Indian state of Gujarat, which will have an annual production capacity of 170,000 vehicles when production begins in 2014, but with the prospect of expansion up to 340,000 vehicles, 300,000 engines, and 300,000 gearboxes by 2020. The success of these measures will be key to increasing the proportion of sales outside Europe to 50%, a point that it is looking to achieve by the end of 2015.

While developing markets are key to growing unit sales, PSA's plans to grab a portion of the premium and niche markets will help support improved profitability. PSA said in its statement that during the past 12 months, this type of vehicle has risen from 13% to 18%, which has no doubt been helped by the addition of the Citroën DS4 and Peugeot 508 which have joined the already successful Citroën DS3, and Peugeot 3008 and RCZ. This is expected to improve further as the Citroën's C4 Aircross and DS5 and Peugeot's 508 RXH and 4008 are brought to market. Nonetheless, the automaker is facing a tricky 2012 with the headwinds in the European market facing it, although it believes that it will be helped through this period by the replacement for the 207, the 208, as well as the facelifted Citroën C1, Berlingo and Jumpy and Peugeot 107, Partner and Expert. IHS Automotive anticipates that despite its efforts here and elsewhere around the world, PSA will see a further dip in 2012, but will then jump over the following couple of years, hitting almost 4 million units by 2014, with a further surge in 2018 to over 4.5 million units.