One group, 2 marques, 3m  vehicles, 4% margins, 5% of the world market, 6 partners.

Peugeot Citroen ranks as one of the little guys among the Top Ten global car groups but its results yesterday showed that it is still getting by just about - though very much in its own way.

The proposition - encapsulated by the group's branding slogan, One Group, two Marques - is still a curiosity, in that it pitches two full-range volume car brands one against the other in many markets around the world. Yet it gets better than average returns.

Much of the debate after 2004 results publication yesterday was around the potential to sustain that, and the share price descent of four per cent suggested that the market was uncertain that it could.

Certainly there are concerns about the rising price of raw materials; oil and steel price inflation could add €300m or more to the shopping list. But the offset would be scope for even greater internal efficiencies and a breaking wave of new models.

New models would not make a full-year financial impact in 2005. So the thought is that group sales volume will be up just a little and the margins flat or slightly better for an earnings profile not that much different to the €1.4bn just declared, according to chief executive Jean-Martin Folz.

Next year however - 2006 - the full-year new model impact should be quite dramatic. PSA - like other carmakers - has seen a reliable pattern of higher sales and stronger transaction prices in the years of new model impact.

This time around, a third of the 3.3m vehicles produced are renewed at once, starting with the new Peugeot 407, then new Citroen C5 and C4, the Peugeot 1007 and 107 and the Citroen C1.

Chief financial officer Yann Delabriere quite likes his investment phasing within the group so that each of the two marques refreshes their styling in the life of the shared platform.

The group is also happy with its joint venture partnership arrangement. M.Folz is easily able to convince an audience at the moment that equity stakes in, or ownership of other companies is not necessarily the way to go (think Fiat or MMC or Jaguar).

PSA's current tally of active partnerships is V6 petrol engines and auto gearboxes with Renault, MPV and Boxer vans with Fiat, a full range of diesel engines with Ford, two 1.6 litre gas engines with BMW and the Citroen C1 and Peugeot 107 small car is built with Toyota in Czechoslovakia.

There is a seventh; the joint venture with Dongfeng in China. But we don't really talk about that one yet because it dropped a hundred million bucks last year making only 90,000 cars. So it's not just equity stakes that can be expensive.

M.Folz says that PSA is now seen by the other players as "the specialist in co-operations".

"They work. We save capex and reduce time to market and we continue to look for co-operations where they suit."

So that would seem to be the future for the Frenchmen. Even if the operating margin was to be three point something this year, that would still leave the company in the middle of the world's Top Ten league table of producers and probably still nicely cash generative.

It could be a very long time before PSA becomes susceptible to merger talks.

Rob Golding