Peugeot Cuts by Half Its Lineup to reach 2% Margins by 2018 image

PSA Peugeot Citroen plans to return to profitability by cutting its model lineup by almost 50% and by turning the Citroen unit’s DS badge into a stand-alone brand.

PSA Peugeot Citroen Chief Executive Officer Carlos Tavares said that the strategic plan will help the automaker increase its operating margin in the auto sales to 2% by 2018 and to 5% in the 2019-2023 period. Tavares was named CEO of Peugeot at the end of last month and it is his responsibility to guide a reorganization after the automaker’s losses surpassed 7.5 billion euro over the past two years and a half.

Tavares said that the new strategy will be aggressive and it implies cutting the number of models from 45 to 26 by 2022 and also expanding in markets outsideEuropeto reduce its dependence on the continent. The plan will be funded by the Peugeot family, the French government and Chinese partner Dongfeng Motor Corp.

“It seems to be the minimum requirement, but it’s a start,” Erich Hauser, said a London-based automotive analyst at International Strategy & Investment Group. “When you run a big ship like this, you can’t expect to turn it around in a few years.”