Frankfurt/Paris: French carmaker PSA Peugeot Citroen plans to cut costs and jobs as it braces for tougher economic conditions, its chief executive said on Tuesday.
“In 2009, when we made our performance plan, we saw a recovery in the European market from 2011, which would continue in 2012,” Philippe Varin told reporters at the Frankfurt auto show. “In fact, we’re realising that this year (the market is) not recovering.”
PSA has said it is expecting group recurring operating profit higher than the 2010 level and positive free cash flow, and Varin said he saw no reason to change those targets.
However, the company was preparing for “more difficult times”, Varin said.
“When I see what is happening today in Europe in the world of politics and in the financial sphere, our responsibility is to say to ourselves that growth might be below our forecasts. So that is why we’re accelerating, we’re trying to anticipate what might happen,” he said.
In 2009 PSA launched a long-term performance plan that targeted €3.3 billion of profitability improvement through cost cuts and new model launches aimed at gaining greater market share, particularly in key markets like China.
It increased that target by €400 million earlier this year as it was ahead of its goals.
Varin earlier told the Financial Times and Le Figaro newspapers the company was cutting shifts and small-car production and studying ways to cut costs further as it braced for a tougher environment.
The company was also looking at cutting jobs, but could trim the workforce without having to sack workers, he said.
Varin said he expected a 1% drop in the European car market this year.
On Monday, Toyota Motor Europe chief executive Didier Leroy told reporters that growing fears over Greece could dent consumer confidence in the euro zone.