Peugeot Invests in Nursing Homes Diversifying its Strategy image

PSA Peugeot Citroen spends around 200 million euro in cash every month, but the automaker’s founder gets profit from other investments, such as nursing homes.

Over the past 10 years, the company has diversified its strategy, acquiring 7% of Orpea, which operates assisted-living facilities. Peugeot’s diversified strategy also reduced the automaker’s share of assets from 90% in 2000 to 35%. Unfortunately this strategy is not quite beneficial for the company’s commitment, leading its shares to a 23-year low.

“As the number of descendants keeps growing, some of the younger ones may become less involved in the car business and may be tempted to leave the ship if it isn’t profitable enough,” said Bernard Jullien, an industrial economist with French automotive think-tank Gerpisa.

Peugeot, which is the second largest carmaker in Europe after VW, has lost 662 million euro in the region in the first half of the year. As the automaker is slow to expand outside, Europe accounted for 76% of revenue in 2011, compared with 65% for VW. In order to raise the profit, Peugeot has sold its Paris headquarters, issued 1 billion euro in new shares and sol 75% stake in its Gefco trucking unit for 800 million euro to OAO Russian Railways.