The Citroen C1, Peugeot 107 and Toyota Aygo are products of one of the most ambitious joint ventures yet undertaken. And one of the most unlikely, reports Richard Feast.

The all-new factory built on a greenfield site near Kolin in the Czech Republic adds a new dimension to collaboration between competitors in the motor industry. This is where PSA/Peugeot-Citroen and Toyota are now producing the Citroen C1, Peugeot 107 and Toyota Aygo city cars.

All seems to be going well. What intrigues the rest of the motor industry, though, is the unlikely partnership between these French and Japanese groups. Both are among the most commercially successful in the business today, but their cultures and strategies sit at opposite ends of the spectrum. Only a few years ago, the then head of PSA warned of the danger to Europe posed by new Japanese car factories in the UK. He likened them to an invading armada poised to strike at the heart of Europe, or some such twaddle.
Times have changed. Toyota climbed steadily from post-war obscurity in Japan to become No. 2 in the world today. It is a leading player in most markets of the world and is currently making a major sales push in Europe. In addition to its half share in Kolin, it has six manufacturing plants across the region, including one in France.
Toyota’s strategy is based on internal growth and minimal collaboration with other car makers. PSA is quite different. It is the result of the 1976 takeover of Citroen (eventually successful) and the acquisition two years later of Chrysler Europe (a failure). Until its recent determined efforts to sell in the rest of the world, the group was essentially European, and mainly French at that. Joint ventures with other car makers such as the one with Toyota are a cornerstone of its strategy.

Both groups have won lots of new customers in recent years. In PSA’s case, much of that success stemmed from the eye-catching designs of the latest Citroen and Peugeot models. The same is not true of Toyota. Whatever the merits of its products, customers tend not buy Toyotas for their design flair. At least until very recently, Toyota could out-dull any vehicle maker in the world on design.

The merits of Toyotas stem from the consistent quality of their construction and their reliability. That dependability is reflected in every car ownership survey. The latest customer satisfaction index in the UK compiled by J.D. Power and Associates puts Toyota near the top – and its Lexus brand at the very top – and Peugeot and Citroen nearly bottom.

Those results are reflected in re-sale values. Comparing like for like, EurotaxGlass’s calculates that the Toyota model range typically retains 40.7 percent of its value after three years/60,000 miles compared with 36.5 percent for Peugeot and 33.5 percent for Citroen. A Yaris, for example, has a trade value of 37 percent after three years compared with 34 percent for an equivalent 204 and 29 percent for a C3.

These are the two very diverse cultures that have now come together in a car-making partnership in central Europe. How well can it work?

The start-up project, which involved a shared investment of euros 1.3 billion (around £885 million), appears to be a success. The plant made its first cars at the end of February and was officially dedicated by the appropriate big wigs from both companies and the host country at the end of May. A second shift was added in June and a third is scheduled to start in October. Full production – at an annual rate of 300,000 to be shared equally by the three brands – is expected next spring.

Despite the trio’s obvious similarities, the first reactions among road testers were positive. The cars are economical, surprisingly roomy, well equipped and competitively priced. The only problem, at least initially, will be the ability of Kolin to produce enough cars for customers across Europe.
Even a supply shortage could be a bonus for dealers. The potential buyer wanders into the local Citroen, Peugeot or Toyota dealership to inquire about the new city cars being promoted. But if they are in short supply, how would he or she like to consider a larger, low-mileage C3, 206 or Yaris at much the same price? As Jason King, forecasting editor at EurotaxGlass’s, points out, there’s an incentive for a salesman to push nearly-new models because the dealership’s cash is tied up in them.

The achievements at Kolin stem from the fact that one partner has the lead, even if they share the costs. Toyota laid out the factory and sourced most of the manufacturing equipment in order to produce cars to the famed Toyota Production System. The president of the joint venture is a Toyota man. The basic product engineering was completed by Toyota, though the respective brands were responsible for their visual design differences. Toyota built factories in Poland to manufacture transmissions and three-cylinder petrol engines for all models. PSA supplies the four-cylinder diesel engines. The French group’s primary role was to source components from its extensive network of Europe suppliers.
That means there’s an awful lot of Toyota in these Citroens and Peugeots, which is why EurotaxGlass’s predicts higher re-sale values for the C1 and 107 than for other models in their ranges. They will be 40 percent after three years, or slightly below the 42 percent forecast for Aygo.

Toyota’s role therefore seems destined to help the two French brands improve their below-average positions in consumer surveys. According to Dave Sargent, partner in charge of J.D. Power and Associates’ European operations, where a car is made is not as important as how well it was engineered in the first place. Toyota’s record in this is exemplary.
“In our experience, the vast majority of problems customers report have their origins on the CAD (computer-aided design) screen rather than the factory floor. The problem’s been designed in, and it’s hard for any factory to build it out,” he says.

The so-called invasion armada may just be a rescue mission.

Once upon a time…

Collaboration between companies within the same group in order to achieve cost-savings is standard practice in the motor industry these days. Collaboration between competitors, especially on a scale like that between PSA/Peugeot-Citroen and Toyota, is still relatively rare.

Much of the pioneering work on competitive collaboration was done in the commercial vehicle fields. It was prompted by the need to stamp large, heavy pressings for vans and medium trucks that would sell in comparatively small volumes. Volumes from joint ventures could offset those high costs.

The earliest joint venture of this type was the so-called Club of Four truck cab in 1974. The project called for the development of a common cab for medium-weight trucks for Daf, Volvo, Saviem (later to become part of Renault Vehicules Industriels) and Magirus-Deutz, a German truck maker subsequently bought by Fiat’s Iveco unit. But when the trucks reached the end of their life cycles, the Club of Four was disbanded.

The most enduring commercial vehicle joint ventures date from the 1978 formation of Sevel Nord in France and Sevel Sud in Italy by PSA/Peugeot-Citroen and Fiat Auto. They continue to produce people-carriers and panel vans for both firms.

More recently, General Motors-Europe and Renault shared development and manufacturing costs for their common range of medium-weight commercial vans made at Luton.

In the passenger car field, then-independent Saab Automobile and Fiat Auto’s Lancia division agreed to a large car joint venture known as Type 4. The resulting Saab 9000 and Lancia Thema of 1984 were subsequently joined by two more Type 4 derivatives, the Fiat Croma in 1985 and Alfa Romeo 164 in 1987. But the Swedish and Italian versions never shared the same factory. Takeovers and consolidation sounded the death-knell of the Type 4 after the various models ended their product cycles.

Another joint venture by competitors was overtaken by industry consolidation. Volvo and Mitsubishi Motors made cars together at Born in the Netherlands during the 1990s. The end of that arrangement was signalled when Ford purchased Volvo’s car-making side and DaimlerChrysler (temporarily) bought a majority shareholding in Mitsubishi.

The models now made at Born – Smart ForFour and Mitsubishi Colt – began as a joint venture between what were then DC group brands. After DC decided it wanted nothing more to do with the Japanese firm, Mitsubishi-owned Born is now the manufacturing host to a rival car maker.