PSA Peugeot Citroen president Christian Streiff has signalled “massive production cuts” this fourth quarter “as it is vital that we are correctly positioned to face 2009”.
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A PSA spokesman told just-auto that the group would cut output by about 30% as inventory was currently above 2007 levels and the plan was to reduce stocks to year-ago levels or below.
He added that the company had already said it would not be renewing temporary worker contracts and it was now up to the individual plants in France to decide what permament staff cuts to make after talks with unions. It was too early to make any announcements on such moves.
PSA was determined to manage its cashflow carefully, the spokesman said, adding that 2009 would be a difficult year.
The automaker said its Q3 sales & revenues were down 5.2% to EUR13,301m from EUR14,024m a year ago while automotive sales fell 7.1% to EUR10,184m.
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By GlobalDataPSA said the third quarter results were hit by the drop in automotive markets during the quarter as western European declined 10.7% and growth rates in developing regions – where the group has a strong presence – slowed.
Nonetheless, the group reported Faurecia Q3 sales up 1.7% to EUR2,863m, Gefco Q3 up 4.6% to EUR873m and Banque PSA Finance up 7.0% to EUR534m.
Nine month sales & revenues fell 0.5% to EUR44,600m from EUR44,842m.
PSA said it expected western European automotive markets to fall “significantly” by around 17% in Q4 2008 and the year as a whole to be down by 8%.
“Growth rates in the group’s priority development regions are also slowing significantly and growth is now expected at around 10% overall for the full year 2008,” the automaker said.
“With this dramatic decline in the macro economic environment in the second half of 2008, the Group expects vehicle sales volumes to be around 3.5% below 2007 levels.
“The production cuts will be concentrated in Q4, representing all of the 2008 reduction compared to 2007 levels. As a consequence… the group expects a consolidated operating margin in 2008 of around 1.3%.”
Streiff added: “The solidity and breadth of the group’s financial resources are major assets in the current financial crisis. We are therefore concentrating on cash management as a key priority.”
He said PSA had reacted to the market collapse with exceptional measures to cut production, “even though this is obviously detrimental to our 2008 operating margin.”
Though sales of assembled vehicles fell 9.9% in the third quarter, CKD kit volume rose 11.8%.
After a relatively mixed first half, all western Europe markets recorded a sharp drop in registrations in Q3 (-10.7%).
“France and Germany which had remained positive experienced significant slowdown in Q3 with France recording flat registrations (+3.4% for first nine months) and Germany turning negative to -3% (+1.6% for the first nine months).
“The extent of the decline in the Spanish and UK markets accelerated significantly in Q3 to be down 34% (-23.6% for first nine months) and 19% (-7.5% for the first nine months) respectively. Italy was down 12% (-10.8% for first nine months).
“In this context, the group’s registrations decreased by 5.8% for the first nine months, whilst market share was maintained at 13.8%.”
PSA said eastern Europe started to slow in Q3 recording a decline of nearly 2% after a buoyant first half.
Growth for the first nine months was 5.8% and market share 11.1%.
The booming Russian market grew 24.9% in the first nine months but slowed to 12% in Q3. PSA registrations were up 65% in Q3 and 63.2% for the first nine months.
Growth continued throughout the first nine months in the Brazilian and Argentine markets (+23.8%) but slowed to 19% in Q3. Peugeot and Citroën sales grew 22.4% in the first three quarters but slowed to 14% in Q3.
Brazil showed signs of slowing as Q3 growth of 22% compared with over 30% in the first half.
China PSA registrations were down 6% for first nine months in a market that showed a marked decline in Q3, down 4%.
