Business strategy file: PSA Peugeot Citroën
History of PSA Peugeot Citroën
PSA (Peugeot Société Anonyme) was founded in 1966 by the Peugeot family in order to be the holding of the Société des automobiles Peugeot. This company was founded in 1810 originally producing wind Moulin, but then focusing on the car sector in 1891, becoming one of the first company of the world in this sector. It officially became Société des automobiles Peugeot in 1896. PSA will become PSA Peugeot Citroën in 1976 after the acquisition of Citroën from Michelin in 1974. Right after this acquisition PSA will launch a new series a Citroën cars, the Citroën LN using the technology available from the Peugeot brand. Following good results and good management, PSA decided to acquire Chrysler France in August 1978, who represented 4,5% of the European market at that time, then becoming the first car manufacturer in Europe and the fourth worldwide. At the beginning of the 80’s, facing a difficult rebirth of the brand Talbot (former Chrysler France) and facing issues with their other brands Peugeot and Citroën due to the consecutives Oil Shocks in the 70’s, PSA announced 7371 cut jobs (9% of the total labour). Facing high costs and a lost in competitiveness, PSA decided in 1984 to hire Jacques Calvet as a CEO in order to restructure the group. Jacques Calvet from 1984 to 1997
When Jacques Calvet arrived in 1984, his main goal was to develop the synergy between the brands in order to benefit from the knowledge of each and start benefiting from possible important economy of scale and maintain competitive prices. His will is to develop project on the same basis for the three brands in order to limit the production costs. But he will mainly focus on Peugeot and Citroën, the historical brands, leading to the vanishing of the brand Talbot in 1986, sign of the failure of the acquisition of Chrysler France. Until 1997, the two brands Peugeot and Citroën will continue to be produced in different factories and the gap between the two brands will start to appear significantly. During Calvet’s mandate as a CEO he will be criticised for having lower the quality and appeal of Citroën while focusing more on the historical brand Peugeot. However… (financial datas) Jean Martin Foltz from 1997 to 2006
Jean Martin Foltz replaced Jacques Calvet in 1997 with the aim to deploy the company worldwide with a focus on Brazil and China. He also instituted a new manufacturing process with now the production of the two brands gathered in the same factories to reduce the costs. During this period PSA will earn a lot success with its new Peugeot 206 and their new diesel engines. Jean Martin Foltz will also reinforce the historical collaboration PSA has with Renault (since 1966) and Fiat (since 1978) but also launch new ones with Ford (diesel engine), Toyota, BMW and Mitsubishi to extend their product offer. From 2004, PSA started to encounter more difficulties, with the sector shifting to an even more competitive market, especially in Europe, with an intense price war due to the number of competitors. Also the expecting growth of the car market in China did not happened and the market went oversupplied, leading to a loss in the industry margin. During the first semester of 2006, despite the launch of new cars like the 1007, the results are cut by half and Foltz is forced to fire people. Christian Streiff will become the new CEO in 2007. Christian Streiff from 2007 to 2009
PSA announces the launch of CAP 2010 which is based on a strong growth in foreign markets, a decreased in the fixed costs, a bigger differentiation between the two brands and increased synergy. The global goal of CAP 2010 is to reach a ROE of 6%. This means a 15.5% market share in Europe. 2007 proved to be a good year for PSA with an increase in sales of 1.8%, with 13.8% of market share in Europe. In 2008, Peugeot announced a number of project ready to be launch between 2010 and...
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