Auto manufacturers are suffering on a global scale, but PSA Peugeot Citroën and Renault, France’s two largest automakers, are not sitting back while carmakers struggle to retain market share. Both companies have propelled themselves forward by introducing strategies to swing their companies back to a growth position, and both have plans to expand operations overseas.

Last year, PSA Peugeot Citroën implemented its CAP 2010 (customers, acceleration, products) action plan and, shortly thereafter, announced ‘Ambition 2015’. In 2006, Renault announced its Strategy 2009.


PSA Peugeot Citroën chief executive Christian Streiff says that by successfully deploying CAP 2010, the group will be able to fulfil specific strategic goals, such as selling more than four million vehicles a year; consolidating market leadership in environmentally friendly cars; becoming Europe’s most competitive automaker; and securing a broad and profitable international base by 2010.

Broadening line-up

“We want to broaden the Peugeot and Citroën line-ups and take our share of the growing market segments, boost our leadership in commercial vehicles, and develop ‘competitive premium’ models in each segment,” says Mr Streiff. “We also want to increase the differentiation between our two brands.”

While reducing costs, the company plans to introduce 29 new models in Europe through 2010 and sell an additional 300,000 units in Europe and 400,000 vehicles outside Europe by the end of that year. This means rolling out a ‘PSA production system’ by 2010 that includes developing flexible, modular platforms; extending the manufacturing and sourcing base in emerging markets; and increasing vehicle customisation outside of its plants.

Under Ambition 2015, PSA Peugeot Citroën’s goal is to have a solid European base, profitable growth and extensive international activities in place by 2015. Consequently, the group plans to strengthen its geographical coverage in China and the Mercosur trading bloc in South America with new factories, R&D and styling centres, increased production capacity, and more local purchasing.

In China, PSA Peugeot Citroën, with joint-venture partner Dongfeng Motor Company, plans to set up a third manufacturing plant in Wuhan in 2010 and launch 12 new models. Since 2002, both companies have been operating together as Dongfeng Peugeot Citroën Automobile Company (DPCA). Its ambition for 2015 is to be a recognised and profitable market player with long-term sales of one million vehicles and to become a leader in the Chinese auto industry.

Into Russia

PSA Peugeot Citroën also has its eye on Russia – a market regarded as a priority growth region, despite the worldwide economic slowdown. Last June, PSA Peugeot Citroën and joint-venture partner Mitsubishi Motors broke ground on a new factory in Kaluga, located 290 kilometres south west of Moscow. It will produce cars for Peugeot, Citroën and Mitsubishi. Mr Streiff says the investment is costing his company between $460m and $540m and will hold a majority 70% share in the project. Production is planned to commence in 2011.

Mr Steiff is convinced that the manufacturing diversity of this future joint venture is a good answer to Russia’s high-growth market, particularly for mid-range vehicles, which represent half of Russia’s sales, and sport utility vehicles, which are regarded one of Russia’s most buoyant segments. Prior to the joint venture, the two automakers had separate deals with the Russian government offering them financial incentives to assemble cars in the country.

French rival Renault is also active in Russia, via its strategic partnership with AvtoVAZ, of which Renault owns 25%. Renault finalised a deal in February to take 25% equity in AvtoVAZ, thereby making it that company’s sole strategic partner. This dovetails well with the Renault Strategy 2009 plan to mobilise the entire company aroundcommitments to quality, profitability and growth.

Exclusive choice

“Out of many candidates, we were chosen to be [AvtoVAZ’s] exclusive partner,” says Renault chief executive Carlos Ghosn. He adds the partnership is an exceptional opportunity for Renault, given that AvtoVAZ’s current production capacity is more than one billion vehicles. “By reviving the larger brands, the alliance will become the clear leader in the Russian market – soon to be the largest in Europe,” he says.

According to Mr Ghosn, the Russian auto market has doubled in the past five years, at a time when mature markets have contracted. “And the pace of growth is accelerating,” he adds, “given the constant rise in purchasing power and the current rate of car ownership of only 150 vehicles per 1000 inhabitants in Russia compared with 587 in France.”

Renault has also extended its production capacity in Colombia, Russia, Turkey and Romania and launched into new markets in India and Iran. Since the long-term outlook for mature markets is at best flat, the company is also building two new plants, along with alliance partner Nissan, to expand its international production capacity. Those will be located in Chennai, India, and the Port of Tangiers, Morocco. Both expected to start commercial production by 2010.

“Our ambition is to make these two plants, which will each have an annual production capacity of 400,000 vehicles, the most competitive in our production system,” says Mr Ghosn.

Industry insiders say the Moroccan plant will be one of the largest such facilities on the African continent. The facility will build Renault’s Logan and other low-priced vehicles for export. The French/Japanese conglomerate plans to invest more than $1.3bn in the facility. The Logan was initially built in Romania and is now built in seven regions, including Russia, South America and Iran.

Renault will also start assembling right-hand-drive Sandero cars next year in South Africa at a plant north of Pretoria owned by its affiliate, Nissan Motor. The goal is to expand its share of sales in this rapidly growing emerging market. The project marks the first time that a Renault vehicle will be produced in South Africa. The Sandero was first launched and produced in South America in December 2007.

According to Patrick Pelata, Renault’s vice-president of Asia-Africa projects, Renault might export the car elsewhere in Africa and to Europe. The South African government encourages exports by giving carmakers discounts on imported vehicles and components.


PSA Peugeot Citroën


Ile-de-France, Paris, France

Annual turnover (2006)


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Nord-Pas-de-Calais, Boulogne-Billancourt City, France

Annual turnover (2006)


Industry sector