Peugeot's sales plummet 16.5% on weakness from southern Europe, Iran

The group blamed the effects of the debt-crisis in southern Europe for the extent of the sales plunge.

But the director for brands in the business, known fully as PSA Peugeot Citroen, said it expected sales to rise this year, excluding the sale of parts for assembly in Iran and despite expected further contraction of the European market.

PSA is struggling to restructure its business with a controversial plant closure in France, the shedding of 8,000 jobs, a strategic alliance with U.S. group General Motors and a drive to expand sales outside Europe.

Brand director Frederic Saint-Geours said he expected group sales to rise this year but did not provide figures.

He said in a statement that “the group is being hit full blast by the lasting fall of European markets” which he estimated would shrink further by 3-5 percent this year.

GM operates in Europe under the Vauxhall and Opel brands, but Saint-Geours said that there was no project for PSA to buy Opel which is based in Germany.

He also said that PSA did not intend to reduce its holding of 57.4 percent in the manufacturer of car parts Faurecia.

PSA is the second-biggest car manufacturer in Europe after German group Volkswagen which is strongly placed on export markets for high-quality vehicles, but the French group's sales fell below the 3-million level in 2012 to 2.965 million.

By contrast Volkswagen announced in December that by the end of November it had beaten its sales in 2011, with a total of 8.29 million vehicles sold.

A report in mid-year by the newly installed French socialist government, in response to the shock announcement of the job cuts by PSA, found that the group had made strategic mistakes over 20 years, notably by missing the bus of globalization, but accepted that it had no choice but to enact a deep restructuring.

In October, the government guaranteed financial support for the group of 5-7 billion euros (US$6.54-9.15 billion) in the form of support for the subsidiary providing credit to customers and dealerships.

On Wednesday, the group said that the government had provided details of the support to European Union competition authorities in Brussels. The EU has made clear that it considers the rescue to amount to help for a restructuring of the entire group.

PSA gave new insights on January 2 into its problems, saying that sales in its home market France had dropped by 17.5 percent last year. Sales in Italy, Spain and Portugal fell even harder.

The group does 60 percent of its business in France and southern Europe. However, sales held up in Germany and rose in Britain.

The group has factories in Russia and in China and sales in Russia surged by 7.4 percent to 78,000 and in China they rose faster than the market, by 9.2 percent to 442,000 vehicles.

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