M&CI Services

PSA Profile, November 2019

© Atos - For internal use

Table of Content

▶ Executive Summary – SWOT

▶ Performance & Management
▶ Corporate Overview – Latest Financials
– Introduction – Leadership & Organizational Charts
– Business Description
▶ IT Information
▶ Top Messages – IT Services Published Deals
– Strategy – ICT Spending & Technologies in Use
– Customer Conversations

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Executive Summary
 PSA Group
Executive Summary
Key facts Upcoming Deals
▶ Atos SE: 150m€ Conversations
▶ PSA is an automotive company. It designs, manufactures and sells
▶ Relaunching Opel Brand
vehicles. PSA also offers wholesale and retail financing, and Outsourcing deal (end
date: July 2025) ▶ Partnering with Rosbank
mobility services. It markets offerings under the Peugeot Citroen
DS and Opel Vauxhall brands. ▶ Atos SE: 8m€ Group
▶ PSA serves customers in Europe, Asia, Eurasia, Latin America, the Outsourcing deal (end ▶ Merge with Fiat Chrysler
Middle East and Africa. The company has manufacturing and other date: Dec 2021) Automobiles
facilities across the world. PSA is headquartered in Paris, Ile-de- ▶ IBM Corporation: ▶ Three Values
France, France. 8.2m€ Outsourcing deal ▶ Stable Sales
▶ It had 427 subsidiaries by the end of FY2018. The company has 16 (end date: July 2020) ▶ Names Preferred Digital
production sites across the world and has presence in 160 countries. Partner
▶ Testing Autonomous
Vehicles in Spain
S W O T ▶ Core Technology Strategy
SWOT Analysis

▶ International Expansion
▶ Focused R&D ▶ Excess capacity in ▶ Alliance with GM ▶ Scale of Opel
▶ New Manufacturing Plants
▶ Twin Core Platform Strategy Europe ▶ Strategic Initiatives merger
for Astra
▶ Clear Recent Strategic Aims ▶ Dependence on ▶ Focus on New ▶ Competition
▶ Posts 2019 Profit
and Intent Europe Markets ▶ Raw Material ▶ Looking to Expand Footprint
▶ Strong Financials and Long- ▶ Product Recalls ▶ China, Russia and Price
Fluctuations ▶ Confirms 2026 Return to
term Shareholding Structure ▶ Business North Africa U.S.
▶ Ownership in Faurecia Performance: Latin ▶ Collaborations ▶ US Revival of
America Sanctions on ▶ Stepping Up Push to Pass
▶ Business Performance: ▶ Global Automotive Iran ▶ Indian Market
Automotive ▶ PSA Caught Between Industry
Premium and Value ▶ Regulations ▶ Electric Vehicles More
▶ Strong Presence in Europe Brands ▶ European Green Expensive
▶ Market Position Vehicles Initiative ▶ Looking for New
4 ▶ Return
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Corporate Overview
PSA Group
Introduction

▶ PSA Group (PSA) is an automotive company. It

designs, manufactures and sells vehicles.
▶ The company produces light commercial vehicles and
passenger cars, automotive equipment, components,
automotive exteriors and modules. PSA also offers
wholesale and retail financing, and mobility
services.
▶ It markets offerings under the Peugeot Citroen
DS and Opel Vauxhall brands.
▶ PSA serves customers in Europe, Asia, Eurasia,
Latin America, the Middle East and Africa. The
company has manufacturing and other facilities
across the world. PSA is headquartered in Paris,
Ile-de-France, France. ▶ Annual Report 2018 here
▶ It had 427 subsidiaries by the end of FY2018. The ▶ Employees 196,885
company has 16 production sites across the world
▶ Turnover (US$ m): 87,358 (74,027 m€)
and has presence in 160 countries.

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PSA Group
Introduction

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PSA Group
Business Description

▶ Business Overview: PSA operates its business through four segments: Automotive, Automotive
Equipment, Finance Companies and Other Businesses.
▶ Business Segment:
1. Automotive
• Key Stats: In FY2018: -Vehicles sold (in million): 3.88.
• Performance: Reported revenue of EUR58,551 million for FY2018, which grew 24.2% YoY,
and recorded a CAGR of 25.7% during 2016-18. The segment accounted for 77.265% of the
company's revenue in FY2018. Its operating income was EUR3,340 million, which grew
2.3% YoY. Peugeot Citroen DS business reported revenue of EUR41,638 million, which grew 3.4%
YoY, and contributed 71.1% of the segment's revenue Opel Vauxhall business reported revenue of
EUR16,913 million, which grew 146.4% YoY, and contributed 28.9% of the segment's revenue. In
FY2018, revenue grew due to success of the Peugeot 2008, 3008, 5008, Citroen C3 Aircross, C3-XR,
C5 Aircross, DS7 Crossback, Opel/Vauxhall Crossland X, Mokka X and Grandland X SUV models,
launch of the Peugeot Expert and Citroen Jumpy in Eurasia, and contribution from its LCV products
and services in Latin America. CAGR during 2016-18 was due to expansion of its position in
European SUV market, increased demand for Peugeot brand, success of the Peugeot 5008, and
positive performance of the Peugeot 4008 in China; reinforcement of market position of Peugeot and
Citroen brands in European LCV market; 55% increased sales in Eurasia and 13% in Latin America.

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PSA Group
Business Description

• Overview: Designs, develops, manufactures and sells light commercial vehicles and passenger cars.
-It also provides spare-parts, replacements , and automotive servicing and repair services. -Brands:
Peugeot Citroen DS and Opel Vauxhall.
2. Automotive Equipment
• Performance: Reported revenue of EUR15,418 million for FY2018, which grew 2.8% YoY,
and recorded negative growth of 4.3% during 2016-18. The segment accounted for 20.346% of
the company's revenue in FY2018. Its operating income was EUR1,115 million, which grew
5.2% YoY.
• Overview: Develops, manufactures and markets automotive interior systems, automotive seating
and emissions control technologies. -Major customers: Volkswagen, Ford, Groupe PSA,
Renault-Nissan, GM, Daimler and BMW. -Operating company: Faurecia group.
3. Finance Companies
• Performance: Reported revenue of EUR1,807 million for FY2018, which grew 34.1% YoY,
and recorded a CAGR of 19.6% during 2016-18. The segment accounted for 2.385% of the
company's revenue in FY2018. Its operating income was EUR927 million, which grew 49.5%
YoY.

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PSA Group
Business Description

• Key Stats: As of December 31, 2018: -Total retail loans outstanding (in EUR million): 26,256.
-Total wholesale loans outstanding (in EUR million): 11,682. In FY2018: -Insurance policies sold by
BPF (in million): 1.68 -Cars financed (in million): 1.07.
• Overview: Provides retail financing to customers and wholesale financing to dealer networks.
-Service offerings: loans for the purchase of new and second-hand cars, short- and long-term
operating leases, finance leases, and insurance, maintenance and extended warranties; credit
insurance, private health insurance and auto insurance; extended warranties, maintenance contracts
and roadside assistance. -Offers financing services to the Peugeot, Citroen, Opel Vauxhall and DS
brands and dealer networks. -Operating company: Banque PSA Finance Group.
4. Others Businessess
• Performance: Reported revenue of EUR3 million for FY2018, which grew 50% YoY. The
segment accounted for 0.004% of the company's revenue in FY2018. The segment posted loss
of EUR23 million.

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PSA Group
Business Description

▶ Geographically they report their activity as follows:

1. China & South-Asia
• Target Markets: China, Vietnam and Malaysia.
• Performance: Reported revenue of EUR3,147 million for FY2018, which grew 7.8% YoY,
and recorded negative growth of 0.7% during 2016-18. China & South-Asia accounted for 4.3%
of the company's revenue in FY2018. In FY2018, revenue grew due to increased sales in South East
Asia. Negative growth during 2016-18 was due to 32% sales fall in Chinese passenger vehicle
market and the country's unfavorable economic environment.
• Key Stats: In FY2018: -Vehicle sales Opel Vauxhall: 581 DS: 3,955 Citroen: 114,419 And Peugeot:
143,628.
2. Eurasia
• Performance: Reported revenue of EUR557 million for FY2018, which grew 16.8% YoY, and
recorded a CAGR of 28.2% during 2016-18. Eurasia accounted for 0.8% of the company's
revenue in FY2018. In FY2018, revenue grew due to 7% sales increase in Ukraine, and performance
of Peugeot 3008, C4 Sedan and the newly produced LCVs in Kaluga. CAGR during 2016-18 was due
to 38% higher sales in Russia and 62% in Ukraine, performance of Peugeot 3008 SUV, 126%
increased sales of Citroen’s Grand C4 Picasso particularly in the BtoB segment.

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PSA Group
Business Description

• Target Markets: Russia and Ukraine.

• Key Stats: In FY2018: -Vehicle sales DS: 57 Opel Vauxhall: 180 Citroen: 6,391 Peugeot: 8,660.
3. Europe
• Target Markets: The Netherlands, Slovakia, Poland, Austria, the UK, Italy, France, Germany, Czech
Republic, Portugal, Belgium, Spain, Belarus, Switzerland, Hungary, Luxembourg and Malta.
• Performance: Reported revenue of EUR58,007 million for FY2018, which grew 25.4% YoY,
and recorded a CAGR of 22% during 2016-18. Europe accounted for 78.4% of the company's
revenue in FY2018. In FY2018, revenue grew due to 5% increased sales of Peugeot and Citroen
brands and 6.7% in DS Automobiles, and launch of DS7 Crossback. CAGR during 2016-18 was due
to launch of the Peugeot 308, Citroen C3 and Opel Insignia, enhancement of distribution network of
DS Automobiles, and 23.2% increase in total vehicle sales.
• Key Stats: In FY2018: -Vehicle sales DS: 46,013 Citroen: 824,623 Opel Vauxhall: 1,004,197 And
Peugeot: 1,231,327.
4. India Pacific
• Target Markets; Japan and India.
• Key Stats: In FY2018: -Vehicle sales DS: 831 Citroen: 5,661 And Peugeot: 19,987.

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PSA Group
Business Description

• Performance: Reported revenue of EUR1,478 million for FY2018, which grew 20.6% YoY,
and recorded a CAGR of 27% during 2016-18. India Pacific accounted for 2% of the company's
revenue in FY2018. In FY2018, revenue grew due to 9.6% sales increase in Japan. CAGR during
2016-18 was due to recovery of sales in Australia and New Zealand, 20% sales increase in Japan
and 40% in French Pacific overseas territories, launch of the Peugeot 3008 and 5008, and firm
demand for C3.
5. Latin America
• Target Markets: Argentina, Chile and Brazil.
• Key Stats: In FY2018: -Vehicle sales DS: 969 Opel Vauxhall: 1,110 Citroen: 60,404 And Peugeot:
112,774.
• Performance: Reported revenue of EUR3,842 million for FY2018, which decreased 14.4%
YoY, and recorded a CAGR of 0.8% during 2016-18. Latin America accounted for 5.2% of the
company's revenue in FY2018. In FY2018, revenue dropped owing to 32% sales fall in Argentina,
due to sluggish economic conditions, and exchange rate impacts; and unfavorable conditions in
Brazilian market. CAGR during 2016-18 was due to 13.3% increased sales in Pan-American zone;
launch of Peugeot 3008 and 5008 SUVs; 13.8% increased sales of Citroen across the region, and
21.6% increase in DS Automobiles, primarily in Argentina.

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PSA Group
Business Description

6. Middle East & Africa

• Performance: Reported revenue of EUR2,802 million for FY2018, which decreased 5.8%
YoY, and recorded a CAGR of 9.8% during 2016-18. Middle East & Africa accounted for 3.8% of
the company's revenue in FY2018. In FY2018, revenue dropped owing to Turkish market downturn
and unfavorable market and economic conditions in Iran. CAGR during 2016-18 was due to
increased market share in Morocco, Tunisia and Egypt, and higher sales in Turkey, Israel and the
French overseas departments; and commercialization of production in Kenitra plant, Morocco.
• Target Markets: Iran, Ethiopia, Tunisia, Uruguay, Nigeria, Algeria and Turkey.
• Key Stats: In FY2018: -Vehicle sales DS: 1,440 Citroen: 34,731 Opel Vauxhall: 31,989 And
Peugeot: 223,838.
7. North America
• Target Markets: Mexico and the US.
• Performance: Reported revenue of EUR4,194 million for FY2018, which grew 7.6% YoY,
and recorded negative growth of 3.7% during 2016-18. North America accounted for 5.7% of
the company's revenue in FY2018.

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Top Messages
PSA Group
Strategy – Business Model

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PSA Group
Strategy – Group’s strategic trends

▶ The Group’s strategic trends

– On 5 April 2016, Groupe PSA presented its strategic plan for profitable growth, “Push to
Pass”, covering the period from 2016 to 2021. Having overpassed the initial targets of the Push to
Pass plan for the period 2015-2018, Groupe PSA set and presented on 26 February 2019 the following
new target for the period 2019-2021 (including Opel Vauxhall):
• Deliver over 4.5% Automotive recurring operating margin on average in 2019-2021.
– The Push to Pass plan marks a first stage towards Groupe PSA’s vision for itself: “a world-
ranking car manufacturer with optimum efficiency, supplying standard-setting mobility services”,
making the customer the core concern of its activities.
– This plan builds on the momentum of the previous plan, “Back in the Race”, in terms of
operational excellence and differentiation between the Peugeot, Citroën and DS brands.
– In addition, the “Push to Pass” plan is drawing on the digitalization of the Group and its
competitive teams in order to build:
• a product offensive enabling the launch of “one new vehicle per region, per brand and per
year”. This product offensive revolves around a global vehicle design strategy (“Core model
strategy”) incorporating target technologies (“Core technology strategy”);

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PSA Group
Strategy – Group’s strategic trends

• the Group’s international expansion and profitable growth in all its host regions;
• the expansion of the Group’s business activities, primarily in the areas of after-sales
services and used vehicles, incorporating the development of multi-brand offerings with
the aim of expanding its customer base. The Group is also expanding its activities to
mobility services to meet the needs of its customers (“Core services strategy”), including car-
sharing, connected services, leasing, fleet management and sharing.
– The acquisition of Opel Vauxhall, effective at 1 August 2017, constitutes an opportunity for
accelerating the Groupe PSA growth plan, under the benefit of:
• the leveraging of operational excellence over a widened group;
• a higher R&D capacity;
• volume and synergy gains;
• new automotive brands, with considerable synergy by their image and geographical
footprint.

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PSA Group
Strategy – Push to Pass Highlights

▶ Strategy: A customer-driven
transformation with the Push to Pass
strategic plan
– Mindful of the key changes called for by
the car of the future, Groupe PSA’s
strategy for 2016 to 2021 aims to make
the Group a global car manufacturer
on the cutting edge of efficiency and
a provider of mobility services
favoured by its customers. Driven by
the Push to Pass profitable organic growth
plan, this strategy is underpinned by
three levers:
• The digital transformation of the
Group
• The internal performance culture
• Corporate social responsibility

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – Push to Pass Highlights

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PSA Group
Strategy – R&D Strategy

R&D Strategy
▶ More sustainable mobility, more connected and more attractive: Groupe PSA is preparing today for
tomorrow's mobility.
– THE INNOVATION TRIPTYCH BY GROUPE PSA
• Groupe PSA innovation strategy is focused on customers, the environment and products.
– Innovating to meet customer expectations: this is the compass of innovation, the point of
which is to meet the needs of the greatest number of people and develop original vehicle
features.
– Innovating to limit environmental impact: by reducing the CO2 and pollutant emissions of
vehicles, and by limiting the environmental impact of the materials used to build them.
– Innovating to offer more attractive products, in terms of quality, longevity, value-added
services such as connectivity and autonomy, and the driving experience.
• “For Groupe PSA, an innovative vehicle is a clean vehicle, connected to its environment,
autonomous, and ensuring in-car well-being and driving pleasure”

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PSA Group
Customer Conversations
▶ Groupe PSA has agreed to merge with Fiat Chrysler Automobiles, as previously reported. The
Merge with Fiat companies are expected to issue an official announcement on Thursday, October 31
Chrysler ▶ Fiat Chrysler Automobiles NV and Peugeot maker PSA Group of France have agreed on the terms of a merger
that, if approved by both boards, would create the world’s fourth-largest auto maker by volume with a
Automobiles
market value of more than $48.4 billion, The Wall Street Journal reported in October 2019. Fiat Chrysler
Chairman John Elkann would become chairman of the newly merged company while Peugeot Chief Executive
Carlos Tavares would be CEO. Both would have seats on the board of the new company, which would comprise
six Peugeot appointees, including Tavares, and five from Fiat Chrysler. As part of the deal, Peugeot would
pay €3 billion to its shareholders from the sale of a stake in auto parts maker Faurecia, while Fiat
Chrysler will pay its shareholders a dividend of €5 billion and would also distribute the proceeds from
the sale of its Comau unit, which is valued at about €250 million. The U.S. and French governments have
been briefed on the deal. Issues yet to be clarified include where the joint company would be based and the size
of the stakes owned by the companies’ major shareholders.

▶ Groupe PSA and Rosbank Group are extending their cooperation in Russia with a new partnership
Partnering with between the two groups in order to boost the development of their commercial and financial
Rosbank Group activities, reported the companies in September 2019. Rusfinance Bank, leader in car financing in Russian
market, will finance Peugeot, Citroen and Opel dealers in Russia and will provide, with Rosbank Leasing, retail
financing offers to Peugeot, Citroen and Opel customers. Commenting on this announcement, Paul Willcox,
Chairman of Groupe PSA for EURASIA Region, declared: “This agreement is key to support Groupe PSA strategic
ambition in Russia. This partnership with Rusfinance Bank and Rosbank Leasing will enable to offer competitive
interest rates to dealers and to customers of Peugeot, Citroën and Opel brands in Russia.”
PSA Group
Customer Conversations

▶ The company is launching DS Automobiles in the Ukraine with the first DS Store opening in July 2019,
reported Bloomberg. The Group is also preparing for the relaunch of the Opel brand in Russia starting with the
Relaunching Zafira Life and the Grandland X, Chairman of the Managing Board Carlos Tavares told analysts in July 2019. Opel
Opel Brand wants to gradually increase its commitment in Russia in the coming years and this includes offering a wider range
of products soon. "The launch of a new brand on the Russian market will allow the Groupe PSA to
strengthen its presence in the Eurasia region, expand the offer for existing customers and win new
ones. Along with the Opel brand launch in Ukraine last year we project to triple Groupe PSA brands volumes in
the region by 2021, based on a profitable business and this project will strongly contribute to this target," said
Bezard. An extensive export offensive is one pillar of the Opel/Vauxhall strategic plan PACE!, which will help the
company become sustainably profitable. The decision to re-enter the Russian market – a strategic market
for a global car maker – is part of this plan aiming at the development of the brand in both Europe and global
markets. The goal is to generate 10 percent of the Opel sales volume outside of Europe by the mid-
2020s. To achieve this, the brand will further strengthen its presence in the export markets in Asia,
Africa and South America where it is already present today and will enter more than 20 new export
markets by 2022.

▶ Chairman of the Managing Board of Groupe PSA Carlos Tavares discussed the stability of sales in Eurasia in
January 2019, telling analysts that PSA sales increased notably in Ukraine (+7%). He also noted the good
Stable Sales dynamic of Peugeot 3008, C4 Sedan and the newly produced LCVs in Kaluga (Peugeot Expert and Citroën Jumpy)
which is encouraging. “In an increasingly unstable environment, we thrived with the rigorous execution
of our efficient core model strategy. The product appeal to our B2B or B2C customers supports our pricing
power policy for all of our brands, while we are currently implementing our electrified offensive. Agility and
Darwinian spirit are more than ever important to tackle forthcoming challenges and enhance our customer
satisfaction,” said Tavares.
PSA Group
Customer Conversations
▶ In a July 2019 earnings call, Tavares said Peugot's business model is based on three values of teamwork,
agility, and efficiency. "At PSA, we have decided that we have 3 values. We win together, sometimes we
lose together, but most of the time we like to win together, and we like to win because we are
Three Values competitive people. We like competition. And we understand that, on a stand-alone basis, any individual in the
company cannot win by him or by herself, so everything in our company is cross functional. Everything in our
company is teamwork. And this is why we recognize that we are competitive, but at the same time, we only work as
a team. So that's the first value. The second value is about agility. We recognize that we are in a chaotic world.
We recognize that agility is a more important value than size. And we recognize that we continuously lead the
change in the company, we drive the change. We make sure that we adapt our company, our behaviors, our
thinking to a fast-changing world. And without agility, without mental flexibility, without Darwinism, we will not be
able to make our company win. Hence, the fact that we consider agility is one of our major, if not the most
important value. Last but not least, efficiency and effectiveness. Again, efficiency and effectiveness in this
chaotic world demonstrate that we can make the difference. Every year, we have done better than the previous
year. And every year, we continue to look for improvements. Every year, we recognize that we have not done
everything right. But every year, we are able to achieve a better result. And this is the consequence of our
continuously search for efficiency and effectiveness in our operations. We need to recognize that we didn't achieve
so far, operational excellence. We need to recognize that much more things need to be done."

▶ In a July 2019 earnings call, de Rovira discussed PSA's efforts to expand vehicle production in international
markets including India and Africa. "Nevertheless, let's remind that the group has taken significant decisions
International that will contribute to rebound outside Europe. First, in Middle East and Africa, our new factory in Kenitra has
Expansion now started production, and it will be a game changer in terms of competitiveness of our products in the
region. In India, the group has set 2 joint ventures, one for powertrains and one for vehicles. Powertrain production
has already started in Q1 2019. And starting from 2021, three cars locally produced will be launched in India."
PSA Group
Customer Conversations

New ▶ Groupe PSA in July 2019 announced its intention to manufacture the next generation Astra in two plants
in Europe, according to a report from IBIS Worldwide. The group has confirmed that the Russelsheim plant
Manufacturing will manufacture Astra and that it is planned that the second plant will be Ellesmere Port in the United Kingdom.
Plants for Astra The decision on the allocation to the Ellesmere Port plant will be conditional on the final terms of the UK’s exit
from the European Union and the acceptance of the New Vehicle Agreement, which has been negotiated with the
Unite Trade Union."

▶ While presenting the 2018 financial results of the French company and detailing the next steps of its Push to Pass
Confirms 2026 strategic plan, Carlos Tavares, Chairman of the Managing board, confirmed the Peugeot brand is set to enter the
North American market, Yahoo! News reported in February 2019. "Our decision to bring Peugeot back into North
Return to U.S. America is the culmination of several years of study and research aimed at which of Groupe PSA's brands would
best serve the customer needs of this market," Larry Dominique, President and CEO of Groupe PSA North
America, commented. "We are taking a pragmatic approach to entering the North American market and are
confident that, from the larger 'mobility services' revolution currently taking place, to the more fundamental
models of retail, service, financing and logistics – we'll continue to build our plan on careful, scalable
solutions." While the plan is ambitious and includes several stages, the automaker said it doesn't
want to rush to process and there's a time frame to have Peugeot vehicles on sale in the U.S. by 2026.
In the years before that, the company will run car-sharing and other mobility services which should help it
understand U.S. customers and their tastes. PSA believes Peugeot is “ideally suited for the North
American market” and its American launch will mark the fifth continent where it is marketed.
Currently, PSA is evaluating different locations for its sales entry points. It has 15 American states and
4 Canadian provinces on its list with customers there willing to buy imported cars. These represent 62
percent of vehicles sales on the continent. Meanwhile, Peugeot is also in the process of homologating
vehicles for the local market.
PSA Group
Customer Conversations
▶ Groupe PSA explained in February 2019 that its "Push to Pass" strategic plan is a first step towards
Stepping Up achieving Groupe PSA’s vision: “to become a global carmaker on the leading edge of efficiency and a
benchmark supplier of mobility services”, and perpetuates the Group’s underlying purpose of
Push to Pass preserving freedom of movement by offering sustainable and affordable mobility. To achieve this
objective, the Group plans to take up the major challenges facing the automotive industry, illustrated
by the seven mega trends, and accelerate the implementation of transformation projects that foster
growth and efficiency, particularly in digital technology. The Group’s aim is to increase its sales outside
Europe by 50% by 2021 and to position its brands in new markets: Peugeot in North America, Citroën in India
and Opel in Russia, while enhancing DS’s international footprint. The growth of the brands, with a surge expected
in the field of commercial vehicles, will be led by the "Core Model Strategy," which plans for 116 launches by
2021, including new concepts, with a resulting reduction in the average age of the range – a source of pricing
power for the brands – to 3.5 years.
o Challenges of Energy Transition: The challenges of the energy transition will continue to be a key focus
of the Core Technology Strategy, with strategic management of CO2, faster paced electrification of vehicles
ranges, with 50% of the offering electrified by 2021 and a target of 100% by 2025, and the use of the first
hydrogen vehicles in real-life conditions in B2B customer fleets. Having been one of the first manufacturers
to test autonomous vehicles out on the open road, Groupe PSA will continue to roll out advanced driver-
assistance systems (ADAS) taking into account customers’ cost-use value trade-offs.
o Core Mobility Strategy: The Core Mobility Strategy of the second part of the Push to Pass plan provides
for the international launch of the Free2Move mobility brand, enhanced aftermarket offers driven by the IAM
multi-brand business, and a break into the circular economy field. The used vehicles business is expected to
increase its sales and transactions outside Europe by a third. Financial services will become a decisive driver
of sales performance as the market goes increasingly electric.
PSA Group
Customer Conversations

Looking to ▶ PSA Group is too small to satisfy the global ambitions of Chief Executive Officer Carlos Tavares, Bloomberg
reported in March 2019. The French maker of Peugeot, Citroen and Opel cars is seeking a deal that will expand
Expand its footprint outside of Europe, according to people familiar with the matter. Tavares has met with
Footprint advisers to consider potential collaborations or mergers, said the people, who asked not to be identified. The
deliberations are preliminary and targets haven’t been approached, the people said. Fiat Chrysler
Automobiles NV is attractive to PSA for its exposure to the U.S. and its premium Jeep brand, but
Tavares also sees General Motors Co. as a good fit and Jaguar Land Rover as a possibility, the people
said. Manufacturers are under intense pressure to combine efforts on the slowing market for combustion-driven
vehicles, to save cash for expensive new technologies like electrification, autonomous driving and app-based
services. Tavares, who in five years at the helm has turned around the flagship Peugeot brand and GM castoff
Opel, still relies on Europe for more than 80 percent of PSA’s unit sales. A U.S. partner would
potentially further Tavares’s plan to bring the Peugeot brand back to North America. The company,
which makes the 308 compact and 3008 SUV, plans to ship vehicles in from Europe or China from
2026. An alliance could pave the way for local production without a prohibitive investment and help PSA build
scale. 

▶ French carmaker z1d a sharp increase in first-half profit, as new models and the integration of Opel-Vauxhall
Posts 2019 more than made up for weaker emerging-market sales, according to a report from CNBC. Recurring operating
Profit income at the maker of Peugeot and Citroen cars rose 10.6% to 3.34 billion euros ($3.7 billion),
lifting its operating margin to a new record of 8.7% in January-June. “Our results are proving the
sustainability of our performance despite the weakness of global markets,” Chief Financial Officer Philippe de
Rovira told reporters on a call. “These headwinds were more than compensated by our efficiency and
continuous efforts to save costs,” he added. The profit gain came despite a 12.8% drop in global sales
announced earlier this month, as emerging markets weighed on PSA’s overseas business.
PSA Group
Customer Conversations
▶ In an April 2019 interview with Autocar, Tavares explained why electric vehicles are more expensive than
Electric traditional vehicles. “The cost of batteries is not competitive. If you push the supply of batteries to Asia,
Vehicles More the price goes up. The [EU] rules should coincide with the introduction of a European battery maker. It’s not
Expensive coordinated or planned strategically. Where is the charging network investment? It’s not a 360deg approach and
there’s a lack of rigorous planning. This is serious stuff – the EVs are there and for sale. These are €30,000
(£26,000) vehicles, and there’s no decent charging network. This problem is not all about the car makers.” 

▶ 67yfy the global ambitions of Chief Executive Officer Carlos Tavares, Bloomberg reported in March 2019. The
Looking for French maker of Peugeot, Citroen and Opel cars is seeking a deal that will expand its footprint outside
New of Europe, according to people familiar with the matter. Tavares has met with advisers to consider
Partnerships potential collaborations or mergers, said the people, who asked not to be identified. The deliberations are
preliminary and targets haven’t been approached, the people said. Fiat Chrysler Automobiles NV is attractive to
PSA for its exposure to the U.S. and its premium Jeep brand, but Tavares also sees General Motors Co. as a good
fit and Jaguar Land Rover as a possibility, the people said. Manufacturers are under intense pressure to
combine efforts on the slowing market for combustion-driven vehicles, to save cash for expensive
new technologies like electrification, autonomous driving and app-based services. Tavares, who in five
years at the helm has turned around the flagship Peugeot brand and GM castoff Opel, still relies on Europe for
more than 80 percent of PSA’s unit sales. A U.S. partner would potentially further Tavares’s plan to bring
the Peugeot brand back to North America. The company, which makes the 308 compact and 3008 SUV,
plans to ship vehicles in from Europe or China from 2026. An alliance could pave the way for local
production without a prohibitive investment and help PSA build scale. 
PSA Group
Customer IT Conversations

Names ▶ Dassault Systemes has joined hands with the French automobile manufacturer Groupe PSA as the latter's digital
partner, according to July 2019 report from Auto.com. This partnership comes as a long term strategy with
Preferred intention to deploy the 3DEXPERIENCE platform, which will be used as a key innovation enabler across
Digital the automaker's future activities. Speaking about this partnership, Jean-Luc Perrard, Chief Information Officer,
Partner Groupe PSA said, “Our suppliers play an important role in our strategic plans to prepare for upcoming stringent
carbon emissions regulations, the move from internal combustion engines to electric, and from driven to driverless
cars.” He also added, “Dassault Systèmes shares our vision for efficiency and innovation. By making them our
preferred digital partner, we can prepare with a transformative shift at every level of vehicle
development.” With this partnership, Dassault Systemes becomes the first and only software provider in
the Groupe PSA's global network of 8,000 suppliers. This is a new level of partnership and it will enable
the Groupe PSA to improve efficiency and innovation in the challenging marketplace, the automobile
group claims in a media release. The 3DEXPERIENCE platform offers a holistic approach that will enable
all the verticals of the Groupe PSA to support the value creation process. 

▶ In a July 2019 earnings call, Tavares discussed Peugot's electrification plan and ongoing efforts to meet
Core lower emission regulations. "If I move now to the core technology strategy, we are implementing
Technology rigorously the plan in terms of electrification. As you have seen, we are now launching many electrified cars,
all the e-CMP based cars, DS 3 CROSSBACK E-Tense, the Peugeot 208, it will have the same thing with the PHEVs
Strategy during this year. And in 2019 and 2020, we will launch 7 BEVs and 7 PHEVs, so we are on track to deliver
our electrification plan. And in 2020, 29% of our range will be electrified, 50% in 2021 and 100% in
2025, so we step-up in a very methodic way in a very, very focused way with a high level of rigor from our teams,
fully leveraging the 2 multi-energy platforms that we have created in order to adapt to a very uncertain future in
terms of mix of sales. I can confirm that everything we are doing at the corporate CO2 Committee with the
team shows clearly that we are going to be fully compliant in 2020 and 2021. We have the right
technology, the right platforms, the right components, the right processes to get things done in a highly
disciplined way. And I'm very convinced that what we have been doing in terms of process is a
competitive asset of the PSA Group."
PSA Group
Customer IT Conversations
▶ Autos giant PSA is conducting tests in the Spanish city of Vigo to “advance the development of
Testing
autonomous driving,” according to a July 2019 report from CNBC. The work, which is focusing on
Autonomous vehicle-to-infrastructure-communications, is being carried out by Groupe PSA – whose brands include
Vehicles in Peugeot, Opel and Citroen – and the Automotive Technology Centre of Galicia (CTAG). In an
announcement, Groupe PSA said the goal of the testing was to see how vehicles could communicate
Spain
with “surrounding infrastructure in a complex urban environment.” The collaboration will focus on a
number of areas, including the protection of vulnerable users; automated valet parking; autonomous
driving in urban areas; and “optimal speed regulation” when vehicles approach traffic lights. “This
project in Vigo supplements the trials already carried out by Groupe PSA in Galicia, other parts of Europe and
China,” Ignacio Bueno, the director of Groupe PSA’s Vigo plant, said in a statement. The tests in Vigo fall
under the umbrella of the European AUTOPILOT (Automated Driving Progressed by Internet of
Things) project, which began in 2017 and aims to utilize internet of things technologies to improve
automated driving. Vigo is one of six pilot areas being used for the project. The others are Tampere,
Finland; Versailles, France; Livorno, Italy; Daejeon, South Korea; and Brainport, the Netherlands “These
initiatives bring together the various components of the ecosystem that need to be created in order to deploy the
technologies enabling connected, autonomous vehicles,” Bueno added
PSA Group
SWOT

▶ An established market position, firm ROE, focused R&D activities and improved performance of the
Automotive business line are its strengths, even as declined sales from Latin America region and product
recalls could be causes for concern. The company could benefit from the growth in global automotive
market, European Green Vehicles Initiative, strategic business initiatives and collaborations. However,
competition, raw material price fluctuations and regulations could affect its operations.

Strengths Weaknesses Opportunities Threats

▶ Focused R&D
▶ Twin Core Platform Strategy
▶ Clear Recent Strategic Aims
and Intent
▶ Strong Financials and Long-
term Shareholding Structure
▶ Ownership in Faurecia
▶ Business Performance:
Automotive
▶ Strong Presence in Europe
▶ Market Position
▶ Return on Equity
▶ Excess capacity in Europe
▶ Dependence on Europe
▶ Product Recalls
▶ Business Performance:
Latin America
▶ PSA Caught Between
Premium and Value Brands
▶ Alliance with GM ▶ Scale of Opel merger
▶ Strategic Initiatives ▶ Competition
▶ Focus on New Markets ▶ Raw Material Price
▶ China, Russia and North Fluctuations
Africa ▶ US Revival of Sanctions on
▶ Collaborations Iran
▶ Global Automotive Industry ▶ Regulations
▶ European Green Vehicles
Initiative

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 PSA Group
SWOT
Focused R&D
• The company strives to develop sustainable mobility, more connected and more attractive vehicles; and gain opportunities
from technological, environmental and market changes. PSA focuses on meeting customer's expectations and develop original
vehicle features, reducing the CO2 and pollutant emissions of vehicles by limiting the environmental impact of the materials used to build
them, and innovating more attractive products through connectivity, autonomy and driving experience. In FY2018, it spent 2.5% of its
revenue on R&D.

Twin Core Platform Strategy

• PSA has two core platforms which are steadily taking over as the basis for its entire range including all brand new Opel/Vauxhall
models. The EMP2 platform covers or will cover everything from the 308 upwards and will form the basis of the next
Opel/Vauxhall Astra and Insignia. The smaller CMP platform was co-developed with Dongfeng and will form the basis of all B-segment
Strengths

models in the enlarged group but, because the C3/208 and derivatives were launched before CMP was developed, switching to this
platform will take longer than it will for the larger vehicles to switch to EMP2. The first PSA model to use CMP is the DS3 Crossback,
launched in September 2018 and shown for the first time at the 2018 Paris motor show. The second CMP model will be the next Opel
Corsa.
Clear Recent Strategic Aims and Intent
• The recent success of PSA is not just down to the current Push to Pass strategy. The foundations of the company's recent
recovery were laid in an earlier plan, Back in the Game. This had four key aims:
1. Firstly, to reposition its brands, notably by making DS into a stand-alone brand, the transformation of Citroen into a
supplier of SUVs and crossovers (vehicles which had been largely absent from its portfolio in the past) and making the Peugeot brand
into one of the top mainstream brands, alongside Volkswagen. Success with this objective will be measured by reducing the pricing gap
between Peugeot and key competitors on a sustained basis by 2020.
2. Secondly, to cut the number of platforms used across the group from seven to two (CMP and EMP2) and reduce the number of
models across the three (Peugeot, Citroen and DS) brands from 45 to 26 by the early 2020s; however, more recently PSA has suggested
there will be 34 PSA brand models produced across the two platforms; and once the Opel and Vauxhall range move to PSA platforms,
this number will increase (yet again).

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 PSA Group
SWOT
3. Thirdly, to achieve profitable growth worldwide with a particular focus on Asia. For example, it had wanted the strengthened
relationship with Dongfeng to propel the company from c550,000 unit sales in China in 2013 to over 1m by now, but recent declines in
China means this not be achieved for several years. Other emerging markets, notably Latin America and Russia, have also proved
challenging for PSA but the company expects to breakeven in the Eurasia region (including Russia) in 2018 and claims to be profitable
again Latin America.
4. Finally, to enhance competitiveness especially in Europe. In Europe, it had wanted total wage costs to be less than 12.5% of
revenue by 2016, which would take it closer to the industry's ideal 11%. In fact, it reached 12% in 2015, a year ahead of plan; it
achieved 10.3% in 2017 for the Peugeot-Citroen-DS brands, while for Opel/Vauxhall it expects a ratio of 13.5% in 2018, generating a
11.8% ratio for the group as a whole.
• Also, it wants its capacity utilisation - as measured by the Harbour methodology of jobs per hour (JPH) x 230 days x 2 shifts x
8 hours formula - in Europe to be 115% by 2020. The production JVs with Opel in France and Spain will help, as will the new models
Strengths

allocated to Sochaux, Mulhouse and Rennes in France and Vigo in Spain. The new range includes several crossovers which should help
with maintaining and extending the company's profitability. Having made significant progress, as explained above, the broad objectives
of Back in the Game remained in place with the launch of the Push to Pass strategy.

Strong Financials and Long-term Shareholding Structure

• The involvement of the French government and Chinese company Dongfeng as shareholders greatly helped underpin the
company's financial structure and overall stability. Prior to the French government and Dongfeng becoming shareholders there was
much uncertainty around PSA's long-term prospects and independence. A break-up or sale were spoken as distinct possibilities at this
point. However, PSA and Dongfeng taking stakes in the company and the arrival of Carlos Tavares as CEO changed the situation greatly.
Tavares’ reputation for focusing on cost cutting has been followed in practice by PSA enacting its Push To Pass strategy with
great vigour. Following its return to financial health, PSA was able to make the move for GM Europe’s loss-making
Opel/Vauxhall operations. The acquisition of Opel/Vauxhall pused 2017 revenue over 65bn euros and despite the losses at
Opel/Vauxhall which PSA had to absorb for the last five months of 2017, PSA was still able to report a 2017 recurring operating income
margin for the group of over 6%. In H1/2018, the company produced profits both at Peugeot-Citroen-DS and at Opel/Vauxhall, indicating
that the turnaround strategy, focusing on cost cutting was having quick and tangible results.

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 PSA Group
SWOT
Ownership in Faurecia
• Faurecia's business is based on three product groupings: Faurecia Automotive Seating (FAS), Faurecia Interior Systems (FIS)
and Faurecia Emissions Control Technologies (FECT); its Automotive Exteriors business has been sold to Plastic Omnium.
These groups encompass a wide range of components, systems and modules ranging from exhausts, instrument and door panels and
complete seats and components. PSA's need to raise cash in the early 2010s, in the light of its poor financial performance at that time
had raised serious questions about PSA's continued ownership of Faurecia. Indeed, it was suggested that once PSA's EUR3 billion capital
increase - as a result of Dongfeng Motor and the French government each taking a 14% stake in PSA - was complete that PSA would
offload its Faurecia stake. However, PSA CEO Carlos Tavares has denied that selling the Faurecia stake was part of the turnaround plan for
PSA in early 2014 and he made clear that he wanted PSA to retain control of Faurecia indefinitely. 2017 saw Faurecia's turnover rise by
Strengths

nearly 8% to 20.2bn euros, with operating income up more than 20% at 1.2bn euros, a margin of 5.8% versus 5.3% a year earlier. In
H1/2018. Its revenue reached 9bn euros with an operating margin generating a margin of 7.1%, up from 6.8% in H1/2017.

Business Performance: Automotive

• The company’s Automotive business line is the major contributor to its revenue. In FY2018, this business line accounted for
77.3% of the company's revenue, and grew 24.2% YoY. The success of the Peugeot 2008, 3008, 5008, Citroen C3 Aircross, C3-XR,
C5 Aircross, DS7 Crossback, Opel/Vauxhall Crossland X, Mokka X and Grandland X SUV models, launch of the Peugeot Expert and Citroen
Jumpy in Eurasia, and contribution from its LCV products and services in Latin America were factors for this improvement. Over the past
three years, this business line recorded a CAGR of 25.7%, which was due to expansion of its position in European SUV market, increased
demand for Peugeot brand, success of the Peugeot 5008, and positive performance of the Peugeot 4008 in China; reinforcement of
market position of Peugeot and Citroen brands in European LCV market; 55% increased sales in Eurasia and 13% in Latin America. Its
operating profit grew 2.3% YoY to EUR3,340 million in FY2018.

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 PSA Group
SWOT
Strong Presence in Europe
• Ahead of the acquisition of Opel/Vauxhall, PSA had made significant progress in terms of optimising its European production
network. With its main European production bases in France and Spain, PSA has also moved some production eastwards to Slovakia,
namely all of the Citroen C3 and much of the Peugeot 208, in the search for lower costs. PSA's core plants' efficiency will improve in
France and Spain now that production sharing arrangements with Opel have come on stream; the acquisition of Opel/Vauxhall will give
several PSA plants the chance to add Opel/Vauxhall models to their portfolios in the coming years, and its suppliers will also benefit from
enhanced volumes with shared platforms. The new Opel Combo will be made at PSA Vigo, while the Grandland X is currently
made in PSA Sochaux. This model will switch to Opel Eisenach as some Peugeot 5008 output moves from Rennes to Sochaux, to free up
space at Rennes for higher than expected volumes of the new C5 Aircross. The Opel Zaragosa site benefits from the C3 Aircross, made
there alongside the Opel Crossland X. However, PSA's biggest issues focuses on what it will or can do regarding the Opel plants in
Germany, Poland (Gliwice) and the UK plant at Ellesmere Port. Future model allocations for these plants have yet to be finalized. North
Strengths

Africa will have the next low-cost production sites to be developed, following strong investment in China. Plans for reviving production
in Iran have been cancelled for now and will have to await a change in US sanctions policy in the future. Although the hoped-
for growth in Russia has not materialised, the company is now turning its attention elsewhere, notably Morocco where it is following
Renault and building a major manufacturing plant. It will also open a plant in Tunisia by the end of 2018 to produce a small number of
vehicles for the local market, at a rate of around 1,200 units a year. Production in Tunisia will include a one-tonne pick-up, a Peugeot-
badged version of Chinese vehicle. PSA's main product success in China has been the Peugeot 308 sedan, which is produced locally by
Dongfeng PSA. PSA's presence in China has been boosted by the DS line, which includes three models, the DS 4S, 5LS and 6WR
which are or were made in China for China only. More recent success in China has come from the launch of the localised 4008 and
imported 5008. China will be the launch market for the new C5 Aircross, and will also see at least one China-only DS model by 2018,
along with both plug-in hybrid and full electric vehicles locally made by 2019. In Latin America, PSA invested over EUR200m a year
through to 2015; this helped double its Brazilian production capacity. It is now investing in its Argentinean factory at Palomar which will
make models based on the CMP small car platform from 2019; and in nearby Uruguay it has started a LCV production on a modest scale,
with Expert and Jumpy vans to be made there at a rate of 6,000 units a year, largely from kits shipped from Europe. In addition, it has
built a plant in Malaysia and has it announced a JV in Uzbekistan; this will produce 16,000 LCVs a year, with 50% local content.

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 PSA Group
SWOT
Market Position
• An established market position enables the company to meet customer’s demands and secure benefits from on-going
industry transition trends. With 24.7% share in LCV market and 17.1% share in passenger cars and LCV, PSA is the second
Strengths

largest car manufacturer in Europe. Its Peugeot brand is ranked No.1 SUV on France B2C and B2B passenger cars. The company is the
market leader in French Overseas Departments, and has substantial presence in auto markets in Morocco, Tunisia and Egypt.

Return on Equity
• Return on Equity (ROE) measures and assesses company’s profitability, based on relationship between net profits and its averaged
equity. Firm ROE shows that the company is efficient in utilizing its equity base in delivering better results to its shareholders. In FY2018,
PSA's ROE stood at 16.55%, which was higher than the automotive industry average ROE of 6.75% for the same year.
Dependence on Europe
• For some time, PSA has wanted to reduce its dependency on European sales. Indeed, some years ago it set itself the objective of
achieving 50% of its sales volumes outside Europe by 2015; however, Europe actually represented 63% of sales volumes in 2015, up
from 60% in 2014. In 2016 this fell to 61.4%, largely because of rising sales in China. However, falling sales in China in 2017 led
to Europe accounting for 62% of sales in 2016, and then 65.5% in 2017 – this is because of the addition of Opel/Vauxhall for the last five
Weaknesses

months of 2017 with Opel/Vauxhall being almost 100% European in its sales make-up. In H1/2018, with Opel/Vauxhall becoming fully
integrated into PSA, Europe represented c77% of group sales. PSA already had much to do to reduce its dependence on Europe
and this challenge has only increased since the Opel/Vauxhall acquisition. To reduce its dependence on Europe, PSA needs
its sales in both Brazil and China in particular to recover and for Opel to sell outside Europe.

Business Performance: Latin America

• The company reported a decrease in its sales from Latin America region. In FY2018, PSA's sales from this region accounted for
5.2% of its total sales, and fell 14.4% YoY. The 32% sales fall in Argentina, due to sluggish economic conditions, and exchange rate
impacts; and unfavorable conditions in Brazilian market were factors for this negative performance.

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 PSA Group
SWOT
Excess capacity in Europe
• The acquisition of Opel/Vauxhall brings into sharp focus a challenge which had faced both PSA and GM Europe for some
time, namely their individual and now collective excess capacity across Europe. Although both PSA and GM closed plants in the early
2000s and invested time and effort in re-allocating models between plants in the search for optimal manufacturing efficiency, it was
widely believed that once the merger was complete the issue of excess capacity would still need to be addressed. The question was when
PSA will bite the bullet and close one or more plants, and where the closure(s) will take place.
• For both the PSA and Opel/Vauxhall organisations, the traditional view has been that excess capacity is in high cost
locations, in France and Germany, where it is difficult and costly to close factories; this was evident in the contentious closure
process for the Aulnay plant to the north of Paris in 2013 and the more recent closure of Opel Bochum which cost several hundred million
euros. However, PSA has decided to address the capacity issue in a different way, investing in key factories to make a wider range of
Weaknesses

models, especially SUVs and crossovers, including raising capacity in some factories. The Sochaux and Mulhouse factories especially
will ultimately have over 400,000 annual capacity each, and more int eh case of Sochaux.
• Meanwhile, labour agreements have been struck at most Opel/Vauxhall plants (Gliwice appears to be the only place where no agreement
has been struck). Carlos Tavares, moreover, has emphasised how he has not closed a PSA plant since the took over as CEO and that he
does not want to start; even the UK plants appear to have a future with PSA, with the van plant in Luton already allocated a
new van (from mid-2019) and £100m of investment. In France, with production of the Citroen C3 and most of the 208 volumes moving
from Poissy to Trnava in Slovakia, there were concerns over the future of the Poissy plant, while the Rennes plant in Western France has
seen two of its three assembly lines shuttered, with no realistic prospects of these opening again soon. However, the Rennes factory has a
better medium-term outlook now with the allocation of new crossovers to the plant (5008 and C5 Aircross); and Poissy has a positive
outlook with the new DS3 Crossback launched in September 2018.
• In addition, by moving the 2008 to Spain and adding the Grandland X temporarily to the 3008 assembly line at Sochaux, PSA
appears to have found a reasonable balance between its various plants and the likelihood of closures has receded. The Grandland X will
move to Opel Eisenach during 2019 following the labour agreement being signed there. However, a number of questions remain with
some of the former GM plants. Those in the UK had been seen as the most vulnerable to closure under PSA ownership,
although Carlos Tavares - the CEO of PSA - has tried to assuage concerns about these plants closing.

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 PSA Group
SWOT
• And in April 2018, PSA actually announced that new vans would be made in Luton, using PSA platforms, replacing the
Renault-based Vivaro. This secures the future of the Luton plant until around 2031, while the future of Ellesmere Port will be
determined later when the final allocation for the next Astra is made, a decision which is unlikely before the Brexit deal has been agreed.
The Luton van deal followed agreement with the unions there on future wages and manning levels; a similar agreement is understood to
have been reached at Ellesmere Port, although the long-term future of this plant is uncertain. Elsewhere, the Zaragosa plant appears
to be secure following allocation of all Corsa production there for the new model from 2020.

Product Recalls
• Product recalls and other operational concerns could add costs to the company and affect its reliability and brand image. In October
2019, PSA announced the recall of MY 2018-19 Peugeot Expert and MY 2018 Citroen Dispatch KO in Australia due to central
Weaknesses

seatbelt issue. In April 2019, the company recalled 10,368 Peugeot and Citroen cars in Russia, majorly the Citroen models. The
potential window failure for these vehicles was the reason for these recalls.

PSA Caught Between Premium and Value Brands

• In recent years, premium brands, notably BMW, Mercedes and Audi, have widened their product ranges, entering the volume
manufacturers' traditional heartland in the B- and C-segments. In parallel, newer value brands, such as Hyundai and Kia, have
gained share in the same market segments. Several new entrants have proved themselves the equal of PSA and other
established brands in terms of durability, reliability and quality, with PSA - and other European mainstream manufacturers -
consequently struggling to maintain market share. For example, in 2009, PSA's market share for Europe stood at 12.9%, but in
2015 it was just 10.4% - falling to 9.4% in 2016. Adding Opel and Vauxhall to PSA pushed the enlarged group to 16.5% based on
annualised 2016 sales, ahead of all manufacturers, apart from the VW group. The figures for 2017 are broadly similar and increased by
around 0.5% in H1/2018. To counter the premium brands' encroachment, PSA tried to respond with the DS range, initially as
part of the Citroen line-up and more recently as a stand-alone brand; it tried to repeat the trick with Peugeot and its "hors-
serie" concept and XY trim levels, but with very with limited success. The DS range is now a brand, although its volumes,
currently running at less than 75,000 units annually worldwide, remain marginal in terms of the overall market.

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 PSA Group
SWOT
• New models planned for DS should help the brand's volumes approach 250,000 units a year in the medium term, with the
main new market for the brand actually in China. In Europe, the DS7 Crossback, launched at the 2016 Geneva motor show, is
intended to take the brand into the Audi and BMW crossover market (the DS7, the largest DS model has been price benchmarked against
Weaknesses

the Audi Q3, one of Audi's smallest and cheapest crossovers, highlighting the scale of the task facing DS). Meanwhile, the idea of
developing a premium range within the Peugeot range appears to have been shelved in favour of Peugeot being moved up market on its
own, in a manner similar to that tried by the Volkswagen brand. How successful this will be remains to be seen as Peugeot is far from an
aspirational brand and retains many characteristics of an old "me too" brand, lacking differentiation and a clear market position. While
PSA has set out its plans for its own brands, quite what will happen with the positioning of Opel and Vauxhall – which occupy broadly
similar market positions to Peugeot and Citroen – will be interesting to observe. One advantage which the enlarged group has is that the
Opel and Vauxhall brands have their strengths in markets – Germany and the UK – where the French brands have been relatively weak.
However, Opel/Vauxhall have no premium variants, nor any sign of them being developed in the near term.
Focus on New Markets
• Over the coming years, PSA will introduce a variety of SUV-like crossover vehicles, mainly in the Citroen brand, but also widen
the DS range. The DS7 Crossback, launched at the Geneva motor show, is the first new DS model for Europe and is specifically designed
to take on vehicles like the Audi Q5. More DS models, some of which will likely be China-only models, will follow, with the small DS3
Opportunities

Crossback the first of these models. Citroen is also launching several new SUV/crossovers, notably the C3 Aircross and C5 Aircross;
these models, and a Peugeot one tonne pick-up, sourced from Dongfeng in China, will be made in North Africa. These vehicles, especially
the new crossovers, will take the company in new segments and to new customers - the potential for these vehicles needs to be seized
successfully for the company's new strategy to be a success. Including trim and powertrain variants, the company is now in the midst of a
new model launch programme centring on the 2008, 3008, 5008, Citroen Aircross models referred to above, the Jumpy/Expert vans and
various regional models. The last group will include the pick-up for North Africa, and Chinese only models, eg 308 sedan, DS4S and the
new C6 large sedan. In addition, PSA will look to Opel for further international development, beyond Europe. Selling outside
Europe was not possible when Opel was part of GM, but PSA wants the brand to investigate the potential for non-European
markets. Moves into North Africa, South Africa and parts of the Middle East are under way and we expect additional
markets, in Australia and South America to be under consideration soon.

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 PSA Group
SWOT
Alliance with GM
• Back in 2012, the planned alliance with GM was seen as a significant opportunity for PSA to access greater volumes in
purchasing and consequent cost savings, as well greater shared R&D resources. However, having merged their logistics
operations and sold them to a Russian company and made progress on three joint vehicle programmes, in December 2013 GM announced
that it had sold its 7% stake in PSA. This was followed shortly afterwards by the confirmation of investment in PSA by Dongfeng of China
and the French government. The original plan to achieve greater scale – like Renault and Nissan had done – with shared programmes and
cross-shareholdings, had not worked. GM and PSA later confirmed they would continue their cooperation in subcompact MPVs, compact
crossovers and a subcompact LCV, based respectively on one GM and two new PSA platforms, although these were useful, these
programmes did not give PSA the kind of scale benefits it had been expecting. The first alliance vehicles for Opel and Citroen - small
Opportunities

MPVs/crossovers – are now being be built at (what was the Opel plant) at Zaragosa in Spain, larger crossovers for Peugeot and Opel by
PSA at Sochaux, France. In 2019, the long-planned van joint production arrangement will take place at Vigo in Spain. The next
Corsa programme has seen the original GM platform dropped in favour of making the model on the CMP platform. In the near future, PSA
have to decide its strategy for replacing the Astra; this too is expected to switch to a PSA platform, almost certainly the EMP2 architecture
which underpins the 308 and 3008. The PACE! programme announced in 2017 includes plans for new crossovers to be made in
both Eisenach and Russelsheim, again both on PSA platforms. Plans to make a crossover based on the current Insignia at
Russelsheim are understood to have been cancelled, largely because PSA wants to move all Opel/Vauxhall vehicles to PSA platforms as
soon as possible, including the relatively newly introduced Insignia. As well as the joint projects with and imminent acquisition of
Opel/Vauxhall, PSA also has several other alliances and joint ventures to try to reduce procurement and research expenditures. For
example, it has the following tie-ups: Mitsubishi for electric vehicles; Toyota in the Czech Republic for A-segment cars and
France for compact vans and MPVs; and with Fiat which now produces only large vans in Italy, the microvan project in
Turkey having come to an end. The links with Toyota will continue, but the link with Mitsubishi may not survive the fact that Nissan
now controls Mitsubishi. In the medium term, the Fiat link covering large PSA vans, Jumper and Boxer, which are currently made by Fiat
in Italy, appears secure and may be expanded to include Opel variants in future. All of the above developments indicate how the
acquisition of Opel/Vauxhall now complete, PSA has the chance to achieve the kind of scale economies it had sought in the
original GM alliance.

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 PSA Group
SWOT
Strategic Initiatives
• Strategic business initiatives could allow the company secure growth opportunities. In October 2019, PSA announced its
plans to electrify all of its LCV products by offering electric versions of compact vans for business and individual customers
by 2021 and entire passenger car and LCVs by 2025. This would assist the company in reinforcing its leadership in this segment in
Europe. PSA holds 24.7% share in LCV segment in Europe by the H1 of 2019, and with all-electric offering in LCVs and minivan and
business van versions allows it to gain more share in these segments.

China, Russia and North Africa

• With the collapse in the Russian market and the failure of the Latin America to show any signs of sustained growth, PSA
Opportunities

turned to China for new business opportunities. It has capacity for producing over 750,000 vehicles a year there and had
looked to grow this still further. However, with PSA’s sales falling in China, it has actually had to cut production, and has announced it
would lease one of its factories in the country to Nissan which has a capacity shortage. In early 2016, PSA has announced a significant
joint venture in Iran; shortly after sanctions on the country were lifted in January 2016, PSA announced a EUR400m JV with Iran Khodro
(IKCO). This was due to see three Peugeot models, the 208, 2008 and 301 produced in a new factory in Teheran from 2017. Along with
Renault, which also planned to return to Iran, PSA appeared to have significant first mover advantage here. A second JV with SAIPA was
also due to come on stream shortly after the IKCO venture has come on stream. However, these ventures have been stalled following the
re-imposition of sanctions by the US and the threat of sanctions on countries which continue to trade with Iran. Quite what this will mean
for the long term future of the automotive industry in Iran is an open question. In 2019, a new plant at Kenitra in Morocco, will
come on stream, making the Peugeot 301 and Citroën C-Elysee for the North African and Middle East markets. These models
have been made in Spain at the Vigo plant, but space is needed there for the new 2008 and the addition of the Opel version of the
Berlingo/Partner small vans. Having a plant in North Africa to supply the local market, with a local market cost manufacturing
cost structure – as opposed to a Spanish cost base – should help PSA grow sales in the region. A smaller operation will also open in
Tunisia. New models, notably the 5008, C3, C3 Aircross and DS7, will be added to the Russian assembly plant (using a high proportion of
French and Spanish parts), while a wide range of DS models, including a large sedan (expected to be called DS9) will should be made in
China.

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 PSA Group
SWOT
Collaborations
• Collaborations and contracts could enable the company to enhance its capabilities and secure operational benefits. In
October 2019, PSA signed agreements with Axis Bank and Kotak Mahindra Prime Ltd in India, to provide retail finance and
mobility solutions to customers and customized credit solutions to dealers. This is part of its strategy to enhance customer
reach and market coverage in that country.
Opportunities

Global Automotive Industry

• The growth in global automotive market could benefit the company’s operations. According to in-house research, the global
automotive industry is expected to reach US$1,657.1 billion by 2022, an increase of 19.5% as compared to US$1,386.5
billion in 2017. In terms of volume, the market the global automotive industry is expected to reach 171 million units by 2022,
an increase of 9.9% since 2017. Car manufacturing is the largest segment of the global automotive manufacturing industry, accounting
for 45.3% of the industry's total volume.

European Green Vehicles Initiative

• The European Green Vehicles Initiative (EGVI) through the Horizon 2020 Regulation could benefit the company’s operations. The EGVI
assists in reaching the EU’s climate targets, energy, and transport policies, essentially the 20-20-20 targets for reducing greenhouse gas
emissions, and increasing renewable energy use, and energy efficiency. This initiative is expected to increase energy
efficiency of urban vehicles by 80%, energy efficiency of long distance freight transport by 40% by 2030; help deploy more
than 5 million electric & hybrid vehicles by 2020; and improve battery life-time and energy density at 30% lower cost.
Competition
• The company operates in a highly competitive environment. Inability to compete successfully could hamper its profits. The global
Threats

automotive industry is highly competitive, with manufacturing capacity surpassing current demand. Industry overcapacity led
manufacturers offering marketing incentives on vehicles for maintaining and growing market share. Continuation of or
increased excess capacity could affect its financial condition and operations. Some of its competitors include Audi AG, Mazda Motor
Corp and Toyota Motor Corp and others.

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 PSA Group
SWOT
Scale of Opel merger
• The scale of the task of running Opel around and integrating it into PSA's operations should not be underestimated. While
progress has been made with union agreements in the UK, Germany and Spain. PSA has run up against very powerful and entrenched
unions. Although PSA appears to have a clear plan for merging model lines and commonising platforms – with attendant
benefits and challenges for the supply chain across Europe – the scale of the merger should not be underestimated. GM had
tried for many years to increase Opel/Vauxhall's scale, and reduce its cost structure, but without much success. PSA has found that Opel's
labour to revenue ratio is about 15%, versus the 10% level it regards as competitive. In parallel, with all this, the automotive market is
undergoing massive technological change at present, with the switch to electrified vehicles and autonomous/connected cars unstoppable.
These issues, plus the continuing diesel emissions issue – which has not actually hit either PSA or Opel/Vauxhall yet and may not – will
require significant amounts of management time and resources as well as the merger itself. PSA may well make a success of this merger,
but there is a long way to go before this will be clear.
Threats

Raw Material Price Fluctuations

• The fluctuations in the prices of raw materials could increase the operational cost of PSA and affecting its financial
performance. Frequent changes in pricing and imbalances could affect the company’s operations and profitability. PSA uses
steel, copper, lead, aluminum, resins and platinum group metals as raw materials. It also uses plastic finishers, glass and consumables
and fuels. In addition, the company’s manufacturing facilities rely on natural gas, electrical power and other energy sources.

US Revival of Sanctions on Iran

• In May 2018, President Trump withdrew the US from the international agreement surrounding Iran and its nuclear weapons.
This will mean that countries or companies who continue to invest in Iran beyond certain dates in 2018 may well face
sanctions from the US. PSA's plans to return to the US could well be hit as a result. At the present time, it is not clear how
potential US sanctions against European companies who continue to deal with Iran, which is why PSA has decided to stall its Iranian
activities.

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 PSA Group
SWOT
Regulations
Threats

• The company’s operations are subject to safety, fuel economy, emissions and other regulations. Non-compliance with these laws
and regulations could affect its operations. Automotive industry is controlled by government regulations, which often differs by state,
region and country. Government regulation has arisen, and proposals for additional regulation are elevated, essentially concerns about
global climate change and its impact, vehicle safety and energy independence.

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Performance &
Management
PSA Group
Financial Performance in 2018

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PSA Group
Financial Performance in 2018

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PSA Group
Leadership
▶ Management Board:

▶ Find out more

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PSA Group
Leadership
▶ Executive Committee:

▶ Find out more

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PSA Group
Leadership

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PSA Group
Org Structure

▶ Organizational
Structure:

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PSA Group
Organizational Charts

▶ Organizational
Chart:

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PSA Group
Organizational Charts

PSA Group
PSAIT Group
Charts PSA - IT OrgChart
IT Charts

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IT Information
PSA Group
IT Published Deals

▶ Upcoming Expireing Deals

– Atos SE: 150m€ Outsourcing deal (end date: July 2025)
– Atos SE: 8m€ Outsourcing deal (end date: Dec 2021)
– IBM Corporation: 8.2m€ Outsourcing deal (end date: July 2020)

Check all Deals

Check all Deals PSA Deals

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PSA Group
ICT Spending & Technologies in use

▶ IT Spending

Technologies in use
Technologies in use

PSA -
Technologies in use

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Thank you
For more information please contact:
mci@atos.net

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