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PSA: No mergers!

See one: Citroen's C1 micro is built in conjunction with Toyota.

Citroen claims Peugeot union - and ad hoc joint ventures - is all it needs

10 Nov 2006

IF FORD is quietly looking for a home for some of its European PAG brands then it can forget PSA Peugeot-Citroen.

According to Frederic Banzet, a director of Citroen International who is in charge of all Citroen markets outside France, the lessons learned in the long digestion of Chrysler's European operations and the merger of Peugeot and Citroen have made the group shy of joining up with any other companies in a full-scale merger.

Asked by GoAuto if PSA had any ambitions to take over other brands he said: "No, not really. We believe that size through mergers is not really the right answer to building up scale."Mr Banzet, the most senior Citroen executive ever to visit Australia, said PSA was more interested in achieving scale by sharing components and models in joint ventures with other car-makers than in taking on other brands.

"This has definitely been the strategy of the group to try to share to get real scale on certain categories of components where scale matters including engines, gearboxes or a full car where it would be difficult to go ahead on our own.

"We have experience (with mergers). At the end of the day, PSA in its current shape is the result of one merger and one acquisition. So we know what it takes and how difficult it is to achieve one company from two.

We also know how difficult it is – in terms of what it brings or does not bring – to absorb another company," he said.

"If you tried with hindsight to look at the acquisition of the European subsidiaries of Chrysler it brought something, in a way, because perhaps it was the price to pay to kill a competitor and, at that time, it killed Simca in France and killed Hillman in the UK.

"On the other hand it was extremely costly.

"We had the merger of two networks and we lost good dealers in the move.

33 center image"At the end of the day, if you looked at it six or seven years later, we had two more plants but we were producing the same number of cars than before the Chrysler acquisition."Mr Banzet said: "It took more than 20 years for Peugeot and Citroen come together as a real group that was fully efficient as two brands with full-scale sharing of plans, engineering, etc. Twenty years!"The first stake of Peugeot in Citroen was in 1974 and we only really achieved the current organisation in 1997."Mr Banzet said that achieving scale through joint ventures was a better way to go.

The C1 and Peugeot 107 are made in a venture with Toyota, PSA has joint ventures with Ford on diesel engines, produces petrol engines with BMW, and co-operates with Fiat on light vans made by Fiat in Italy and sold under the Peugeot, Citroen and Fiat brands.

It also co-operates on large MPVs which are produced as a Fiat, Lancia, Peugeot and Citroen. PSA collaborates with Fiat and a Turkish company, Tofas, making a very cheap and very small light van.

The Aussie aim: 10,000
CITROEN is planning to increase its sales in Australia threefold over the next five years to about 10,000 units but plans to increase its dealer numbers by only a little over 50 per cent.

Citroen International director Frederic Banzet told a recent media conference in Sydney that Citroen was expecting to sell 3500 cars in Australia this year and in the medium-term was targeting 10,000 units a year.

"I don’t see why we cannot reach 10,000 plus within, say, five years," he said. "Everything leads logically to that figure knowing the current range, knowing the future range we will have, knowing where the Citroen brand is going and knowing the network we have today and the way the network will be developed further."General manager of Citroen Australia Miles Williams said that the dealer group would be increased from 30 dealers now to about 47 dealers.

"In our metropolitan areas we are pretty right – about 90 per cent right. But we need some rural coverage," he said.

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