China deliveries lift Peugeot’s 2014 sales
Print Edition
FRENCH carmaker PSA Peugeot Citroen’s 2014 sales rose 4.3 percent thanks to a 32 percent jump in deliveries in China, in a sign that mass market producers were outperforming premium brands during an economic slowdown in the country.
PSA said China became its largest market, reaching 734,000 vehicles in 2014, or 25 percent of overall deliveries, thanks to the addition of 100 dealership networks and as customers snapped up midsized crossover vehicles like the Peugeot 3008.
China is a key part of efforts by PSA Chief Executive Carlos Tavares to revive the company after the French state and China’s Dongfeng took 14 percent stakes in the company as part of a 3 billion euro (US$3.6 billion) bailout.
The alliance with Dongfeng has helped Paris-based PSA to reduce its reliance on Europe and expand in the world’s largest car market where manufacturers shift large volumes despite sales growth slowing from 14 percent to 6.9 percent in the past year.
The Chinese expansion is timely as PSA seeks to cut costs, streamline its model lineup and raise pricing in pursuit of a 2 percent operating profit margin in 2018.
PSA figures published yesterday indicated that mass carmakers may be taking less of a hit from slower China sales than premium brands like BMW, which faces demands for rebates from disgruntled dealers.
Peugeot branded car sales rose 43.1 percent in China last year to 386,565 cars. BMW and Mini saw sales in China’s mainland rise by 16.7 percent last year, with a total of 455,979 deliveries.
“We prefer mass over premium exposure in China in 2015,” Stuart Pearson, an autos analyst at Exane BNP Paribas said in a note yesterday.
“While growth in financial services should support the overall market, we fear that the 1 million plus units of new premium capacity added over 2014-15 will continue to pile pressure on pricing.”
China sales are critical for the earnings of European carmakers, accounting for over 50 percent of global earnings for each of the German manufacturers in 2014, analysts at Bernstein Research said in a note, adding that Volkswagen could be a beneficiary while BMW may be losing momentum.
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