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Peugeot blames crisis as sales plunge

French auto giant Peugeot, recently rescued by the government, reported on Wednesday a 16.5-percent plunge of sales last year because of problems in southern Europe and Iran and despite strong demand in Russia and China.

Peugeot blames crisis as sales plunge
A car on the production line at Peugeot's factory in Sochaux, eastern France, last year. Photo: Sebastien Bozon/AFP

The group blamed the effects of the debt-crisis in southern Europe for the extent of the sales plunge.   

But the director for brands in the business, known fully as PSA Peugeot Citroen, said it expected sales to rise this year, excluding the sale of parts for assembly in Iran and despite expected further contraction of the European market.

PSA is struggling to restructure its business with a controversial plant closure in France, the shedding of 8,000 jobs, a strategic alliance with US group General Motors and a drive to expand sales outside Europe.

Brand director Frédéric Saint-Geours said he expected group sales to rise this year but did not provide figures.

He said in a statement that "the group is being hit full blast by the lasting fall of European markets" which he estimated would shrink further by 3.0-5.0 percent this year.

GM operates in Europe under the Vauxhall and Opel brands, but Saint-Geours said that there was no project for PSA to buy Opel which is based in Germany.

He also said that PSA did not intend to reduce its holding of 57.4 percent in the manufacturer of car parts Faurecia.

PSA is the second-biggest car manufacturer in Europe after German group Volkswagen which is strongly placed on export markets for high-quality vehicles, but the French group's sales fell below the three-million level in 2012 to 2.965 million.

By contrast Volkswagen announced in December that by the end of November it had beaten its sales in 2011, with a total of 8.29 million vehicles sold.

A report in mid-year by the newly installed French socialist government, in response to the shock announcement of the job cuts by PSA, found that the group had made strategic mistakes over 20 years, notably by missing the bus of globalisation, but accepted that it had no choice but to enact a deep restructuring.

In October, the government guaranteed financial support for the group of €5.0-7.0 billion ($6.54-9.15 billion) in the form of support for the subsidiary providing credit to customers and dealerships.

On Wednesday, the group said that the government had provided details of the support to European Union competition authorities in Brussels. The EU has made clear that it considers the rescue to amount to help for a restructuring of the entire group.

PSA gave new insights on January 2 into its problems, saying that sales in its home market France had dropped by 17.5 percent last year. Sales in Italy, Spain and Portugal fell even harder.

The group does 60 percent of its business in France and southern Europe. However, sales held up in Germany and rose in Britain.

The group has factories in Russia and in China and sales in Russia surged by 7.4 percent to 78,000 and in China they rose faster than the market, by 9.2 percent to 442,000 vehicles.

But the group suffered setbacks in Latin America, with delays in the extension of a factory at Porto Real in Brazil where it intends to double production capacity by 2015.

Overall the group is reducing its dependance on Europe, with sales elsewhere rising from 33.0 percent of the total in 2011 to 38.0 percent last year and a target of 50 percent in 2015.

The group said in a statement on sales in 2012 before its forthcoming overall results: "PSA Peugeot Citroen recorded worldwide unit sales of 2,820,000 assembled vehicles, down 8.8 percent. Together, sales of assembled vehicles and CKD (completely knocked down or kit) units totalled 2,965,000, down 16.5 percent."

The statement said: "Southern Europe, where PSA Peugeot Citroen has a particularly large presence, was hit hardest, with the market down 13.3 percent in France, 14.9 percent in Spain and 20.9 percent in Italy."

"The decision to suspend sales of CKD units in Iran as from February in compliance with international regulations, which made it impossible to finance Iran-bound sales due to tighter international sanctions, also impacted Group sales in 2012," PSA said.

The carmaker had sold 457,900 CKD units in Iran in 2011.

Peugeot's decision to suspend business in Iran was to comply with international sanctions against the Islamic republic over its nuclear programme.

The firm also came under intense pressure from Washington lobbies to shut down its thriving operations in Iran after General Motors acquired a 7.0-percent shareholding in PSA.

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Power points: What I learned driving 1,777km through France in an electric car

France is a land of many inventions including the cinema, cricket (a disputed claim admittedly) and the electric car, writes John Lichfield.

Power points: What I learned driving 1,777km through France in an electric car
The French government offers big subsidies to people who buy electric cars. Photo: AFP

Unfortunately, the French invented the electric car a century and a half too early.

In late 19th century, many French cars were electric-powered. They operated on giant batteries which could not be recharged. In the first decade of the 20th century, they were run off the road by the Model-T Ford and by cheap, untaxed petrol.

The second French coming of the electric car, post circa-2014, has been slow – despite government subsidies of €6,000 a car, raised to €7,000 from June.

Sales have jumped in the last two years. There are now reckoned to be over 80,000 private, electric cars on French roads – about 2 percent of the national fleet.

This month, I did my bit for the revolution. I drove a Renault Zoe for 1,777 kilometres from Normandy to the Atlantic Coast to Occitanie and back to Normandy.

 

The experience was, by turns, wonderful and frustrating.

Wonderful because we limited ourselves almost entirely to two-lane roads, rediscovering the vastness of France and its endless variety and beauty, often unknown or forgotten.

Wonderful, also, because the secondary road network in France has been so improved and is so well-maintained (whatever the Gilets Jaunes may say). Some of us recall the crumbling and dangerous N and D roads of the 1970s and 1980s.

Almost all of the roads that we travelled – many of them D-roads – were well-surfaced and had expensively remodelled junctions. France has become, overnight it seems, a land of one million roundabouts.

But what of electric travel in France in 2020? Is it a viable alternative to petrol or diesel?

Is it cheaper? How easy is it to find and use the public recharging points?

This is where the frustrations start.

Much depends on what kind of electric car you use. There are now 43 models available for sale in France, ranging from the expensive to the very expensive.

A Renault Zoe on the production line at Flins-sur-Seine in Yvelines. Photo: AFP

A top of the range Tesla costs €90,000; a bottom of the range Zoe costs €32,000 if you buy, rather than lease, the battery. This is between two and three times more than the equivalent petrol or diesel cars.

The government and regional subsidies help but they apply in full only to the cheaper models.

The cheapest Tesla gives you 500 kilometres of travel before you need to stop and recharge. My 2019 Zoe gives, in theory, 300km (actually it can be less, or more, depending on the ambient temperature, average speed and steepness of the terrain). The new version 2020 Zoe gives 395km.

I’ve had my Zoe for just over a year. It is intended as a city or local rural run-about. In that role, it is excellent.

It’s not a car for long-distances, unless you decide, as we did, to re-create the experience of “motoring” through France in the 1960s.

As soon as you travel at over 90kph, battery power melts alarmingly. Ditto when you go up steep hills but at least your battery recharges when you come down the other side.

Teslas, as I understand it, can travel at full autoroute speed without losing too much range. Other, cheaper (but not cheap) electric cars are more like the Zoe.

What about recharging when far from home? This is, in theory, simple. There are over 28,000 charging points in France. Most small towns and many large villages have them.

A charging point in the Place de la Concorde in Paris. Photo: AFP

The problem is that they are operated by local or regional networks – or in the case of the super-fast ones, national or international networks. The prices vary. So do the connecting cables. So do the charging speeds.

Some order and common-sense has been brought to this jumble in the last year or so by badges or cards which give access to most (not all) of the charging bornes. I have joined Chargemap. Other cards are available.

In our Travels with Zoe, the cost of recharges at public bornes ranged from €10.26 to zero. The expensive one was in Perigueux in Dordogne. The free one was at a supermarket south of Limoges.

Free is good but we earned it by spending two hours of our Sunday in an empty supermarket carpark.

Lengths of re-charging time vary with the power of the borne. With our Zoe, a complete recharge at the most common points varied from four hours to two hours. At home it takes 12 hours. The new fast points claim to be able to recharge half a Tesla battery in half an hour.

Finding the bornes is, in theory, easy. There are several apps which list and locate them. In practise, they can be hard to spot. Once found, they are occasionally out of order or closed. In one town we visited, two charging stations were out of action and one had the wrong kind of connection.

For 1,777 km, I spent €26.54 on electricity. Of this €24.44 went on public charging points. The rest – €2.10 – is the estimated cost of three charges on house mains. By my estimate, a similar trip would cost €180 to €220 in petrol or diesel, depending on the size of the car. My estimated saving in autoroute tolls was €90.

On the other hand, the need to recharge for long periods meant that we spent three nights in hotels that we might otherwise have avoided. Cost: €300.

 

Conclusion one: The Zoe is not a car for speeding through France – and does not claim to be. It is a wonderful little car for care-free wandering carelessly La France Profonde (care-free but range-anxious).

For comparison, someone sent me an example of an 832 km Tesla journey in France which took ten hours with two recharges and cost €25.

Conclusion two: Buying an electric car – any electric car – is expensive and probably a bad idea. Their re-sale value is likely to be small as subsequent models improve.

Consider leasing instead. I did not buy my Zoe, I leased it – and its battery – for three years. I reckon that the saving in diesel alone has paid for the lease.

Conclusion three:  This time around, electric cars are here to stay. 

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