PSA Peugeot-Citroen will prematurely end the weekend shift established a year ago at its Sochaux, France, plant to meet then-surging demand for the Peugeot 307, according to Automotive News Europe.
PSA blamed a weak European car market for the move, which is scheduled for August. Initially, the weekend shift was to last until the end of 2003.
But some PSA rivals can shrug off the market. Toyota is adding shifts to boost capacity in Burnaston, England, and Valenciennes, France.
PSA has been Europe’s fastest-growing car maker in recent years — and has suffered the least decline among volume manufacturers in 2003. But to many analysts, PSA’s years as investors’ favourite carmaker are ending. French bank Societe Generale last month reduced their recommendation on PSA to “neutral” from “buy,” citing a less favourable product cycle.
The 307 is two years old, a drawback for customers hungry for new models. PSA’s only new model so far this year is the Citroen Pluriel, a derivative of the C3.
Deutsche Bank had already cut its PSA share recommendation.
“PSA has had some good years, partly on its own strength, partly on its rivals’ weaknesses,” said analyst Gaetan Toulemonde. Noting Volkswagen’s next-generation Golf is due in the autumn, he added: “Those rivals are preparing to hit back.”
For the first time since taking over in 1998, PSA CEO Jean-Martin Folz warned shareholders recently that the company’s financial objectives for the current year would be “tough to reach.”
PSA’s initial 2003 target had been an operating profit between 3 and 3.1 billion euros and a profit margin on car operations between 5% and 5.2%. Folz was more optimistic on volume, saying PSA was “in line” to sell 3.35 million cars.
Now Folz blames a “difficult economic and monetary environment,” and the rise of the euro against the currencies of several key export markets, including the UK, Poland and Brazil. PSA says each 1% fall of the British pound against the euro cuts 38 million euros off its operating profit.