PSA Peugeot Citroen sees further demand drop in 2010 after vehicle sales slip 2.2 pct in 2009

Peugeot Citroen sees more pain in 2010

PARIS — PSA Peugeot Citroen SA said Monday its sales of cars and light trucks slid 2.2 percent last year, as European auto markets contracted for a second year running, and predicted more pain to come this year.

In a statement, the maker of the popular Peugeot 207 and Citroen C4 Picasso said it sold 3.19 million assembled vehicles and kits last year, down from 3.26 million in 2008. That included a 3.3 percent drop for the Peugeot brand and a 0.7 percent slide for Citroen-badged cars and light trucks.

Peugeot Citroen said government scrapping plans introduced throughout the year in response to the global economic downturn had helped boost sales in some countries, especially France and Germany. But the plans’ gradual removal this year means the company expects European sales to fall again in 2010, averaging a one-digit decline over the year.

Jean-Marc Gales, the executive vice president that Peugeot Citroen brought in from Mercedes-Benz last year to oversee brand image revamps at both Peugeot and Citroen, warned that the European market decline “would be closer to 8 percent than 2 percent” this year.

Last year the European market, where Peugeot Citroen sells around two-thirds of its vehicles, shrank by 5.4 percent.

At mid-day Peugeot Citroen shares were up 1.7 percent at €26.97 ($38.49).

Gales estimated that the French government’s scrapping plan had boosted vehicle sales last year by 100,000 for Peugeot and 110,000 for Citroen. Overall the group sold 851,000 cars and light trucks in France last year, up 7.1 percent from 2008.

France introduced the plan in 2008 as part of new environmental and economic stimulus measures, offering French car buyers a €1,000 ($1,440) bonus when buying a new car.

The bonus is scheduled to come down to €700 in the first half of 2010 and €500 in the second half.

Last year Peugeot Citroen unveiled a host of new models as part of its three-year plan to boost earnings by €3.3 billion ($4.95 billion) through cost cuts and higher sales.

The models included the new Citroen DS series of high-end small cars designed for monied urban customers, to be launched in 2010, the electric C-Zero and Peugeot iOn, and a small Peugeot pickup truck aimed at the Brazilian market for trips to the beach or countryside.

The vehicles are designed to meet a changing marketplace with more environmentally conscious urban dwellers, older customers and Asian drivers.

By adapting its offering, Peugeot Citroen hopes to gain market share and close the profitability gap with its competitors.