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Shanghai on the road to profit for Europe's carmakers


Shanghai on the road to profit for Europe's carmakers


The downturn in car sales in Europe, and the sluggish state of the US economy, make finding new markets a matter of survival for some manufacturers which is why China’s main motor show – underway now in Shanghai – is the gateway to the future.

Foreign and joint-venture brands do have an advantage over local marques as they have more caché – and now account for well over half the Chinese market.

General Motors and Volkswagen being the biggest sellers, with vehicles mostly build in China as part of joint ventures.

It has been the world’s largest car market since 2009, and this year is forecast to see 20 million sales compared with 15.5 million in the US and 11.8 million in the European Union.

At the Shanghai show a slew of new models are being unveiled – both cheap and expensive – aimed at finding a place in China’s complex market.

France’s PSA Peugeot Citroen may be struggling in Europe, but its sales in China in the first three months of the year were up by 31 percent from a year earlier, giving it a four percent market share

Euronews reporter Antoine Juillard spoke with Frédéric Banzet, the Chief Executive of Citroën in Shanghai about the European market’s continued decline in March: “Peugeot Citroen sales fell 16 percent year-on-year: what are you doing to halt that seemingly never ending decline?”

Frédéric Banzet: CEO Citroën: “The European automobile market is down by twenty five percent between 2007 and 2012; that represents four million fewer cars being bought by customers in Europe, and we really see no signs that give us hope of a rebound. This year we think the market will drop by around five percent. And we see no signs of a rebound this year or next year, including in Germany.”

euronews: “Do those poor sales figures for March in Europe, mean that Peugeot-Citroën will have to consider more job losses at its plants, on top of those that have already been announced?”

Banzet: “It’s obvious that – unfortunately – because of the major recession in Europe we are having to restructure the company, in Europe. It’s very difficult to take these huge decisions, and we try to do that in the most responsible way possible when it comes to social issues, having made ​​a commitment that we will help every single one of our workers facing problems with employment.

“We’re working on a two-year timetable to get the PSA (Peugeot-Citroen) group back into profit, that is by the end of 2014; even so it’s always a very difficult decision to have to cut jobs, but unfortunately it is the market situation that forces that decision on us.”

euronews: “So, what’s the key to success for Peugeot-Citroën and Citroën; internationalisation or going upmarket – or both?”

Banzet: “Yes, I believe that internationalisation and producing more upscale models are the two keys to success.

“The first will make us less dependent on Europe and increase our presence in growth markets and where car sales are growing.

“And secondly by going upmarket, we add more value in both the group’s brands – Peugeot and Citroën.

“As for my direct responsibility – Citroën – boosting its reputation and image, on the one hand we’re completely transforming our C models – the C1 through C5 – so that they evolve and become even stronger and more attractive, with more ingenious features and more economical.

“And then there’s the DS range, which is more upmarket, but still below the luxury models, and there we have a unique – and credible – position, because we are French, we can say that we’re inspired by French luxury, which people can believe, and that’s what we show in our cars.”

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