Despite revealing a slump in profits, the outlook remains rosy for Peugeot ahead of the launch of a number of new models. While the company will be hoping its new models will give it the same sales boost as rival Renault enjoyed with its new range, the underlying strength of the Peugeot marque alone should see it rapidly bounce back.

Despite its logistics, aftermarket and banking divisions all performing reasonably well, Peugeot’s H1 figures were let down by the automotive division, where operating profit fell by more than a third.

Peugeot issued a statement indicating that the lack of new models in the first half of the year combined with heavy discounting as a response to increasing levels of competition prompted the downturn. Its closest rival Renault is shortly expected to announce strong results in the first half of 2004 due to the introduction of several new models.

Despite the fall in profit, the stock market reacted well to Peugeot’s news as it had predicted an even greater profit slide. Peugeot’s share price in fact rose on the Paris exchange after the profit announcement – compelling evidence that Peugeot’s latest figures are little more than a blip.

Many observers expect that Peugeot’s forthcoming range of new models will be the catalyst for a second half revival, with its new 1007 model especially eagerly awaited. The 1007 is an innovative mini-MPV, complete with electric sliding doors. The MPV segment is a particular growth area in the European market at present, and the new car may yet rival Renault’s reshaped Megane as a mass market car that attracts buyers through its distinctive design.

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Better still, Peugeot is already considered to be a strong brand, capable of retaining as well as attracting customers. This is despite the high levels of competition in every segment of Peugeot’s range. In today’s competitive environment, especially within the volume sector, very few vehicle manufacturers are able to claim this kind of appeal. If Peugeot does indeed turn its performance around by the end of the year, as most analysts expect, it can look forward to a very prosperous 2005.

SOURCE: DATAMONITOR COMMENTWIRE (c) 2004 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.