French automaker PSA Peugeot Citroen relies on its new recovery plan to reach a 2% operating margin in the automotive division in 2018.
Chief Executive Carlos Tavares said that the recovery strategy implies cutting costs and reducing the number of models in order to reach profitability from a loss of 1.042 billion euro in 2013, or 2.9% of sales.
“We are going to focus the creative power of our teams on a more limited number of products that people want to buy,” Tavares said.
Over the past two years PSA Peugeot Citroen has lost more than 7.3 billion euro and in February the automaker struck a rescue agreement which implies selling 14% stakes to Chinese Dongfeng Motor Group and to the French government, past of a 3-billion euro cash infusion. This deal will help the car maker with its struggling operations in Latin America and Russia and see a return to profit in the following three years.
“The group needs to develop a real profit-driven culture and a global approach in order to return to profit more quickly. Pursuing the cultural change already under way at PSA Peugeot Citroën is an important prerequisite for meeting the preceding four objectives,” Tavares added.
PSA Peugeot Citroen also plans to make Citroen’s DS sub-brand a stand-alone premium brand. The French automaker will try to reduce its dependence on the disappointing European market and expand its presence in southeast Asia and China.