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Stronger euro to force PSA withdrawal from least profitable UK market sectors

PSA Peugeot Citroen's 2003 UK sales declined 9.1% and market share came to 11.9%, and the group admits its revenues were affected by the euro's appreciation against the pound. The UK is PSA Peugeot Citroën's third-largest market.

In response to the decreasing profitability of its UK marketing operations, PSA Peugeot Citroën says it “has decided to partially withdraw from the least-profitable market segments”, though it has been confirmed that for Peugeot at least, this entails no changes to the model line-up, but rather reducing exposure to the most heavily discounted sectors, such as the Motability Scheme. Fellow PSA brand Citroen has been one of the most price-competitive UK brands over the last few years, and increased its market share dramatically in 2002 with sustained finance and cash-back offers.

PSA says new model launches will begin to produce a positive impact on PSA's UK sales in the second half of the year. As a result, early 2004 sales should remain on the same trend as in the last six months of 2003. New models, particularly the Peugeot 407, should enable the Group to return to faster growth.

Peugeot was overtaken by Renault which took third position among the top UK car brands in 2003, though Peugeot's 206 was the top model for private consumers last year. PSA's comments on the effect of the euro-pound exchange rate follow suggestions this week from Nissan's Carlos Ghosn that the assembly of the Almera's successor at Sunderland could be decided on the basis of Britain's decision whether or not to join the euro zone.

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