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Citroen bets on China; Europe outlook unclear

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Citroen bets on China; Europe outlook unclear

May 27, 2010 15:01 CET

PARIS (Reuters) -- France's Citroen, part of carmaker PSA/Peugeot-Citroen, is betting on strong growth in China as waning scrapping incentives make European markets hard to predict for the rest of the year, its head told Reuters.

Government schemes to stimulate demand for new cars have supported European auto markets hit hard by a deep industry crisis, but as these schemes end carmakers are increasingly counting on emerging markets for growth.

"We are in an environment that is more uncertain than predictable, except in China, where we have a clear scenario of continuing growth," Citroen Managing Director Frederic Banzet told Reuters, adding South American markets were growing too.

Europe outlook unclear

PSA was sticking with an earlier forecast that the European market overall would fall around 9 percent this year, Banzet said: "Given the growth we've seen in the first four months that means we are on track for a slowing down in the months to come."

"(Car sales) will necessarily fall in a certain number of markets as incentives decrease," Banzet added.

"We hope that the attractiveness of our products and our commercial performance will allow us to compensate in part for the drop in the market," Banzet said.

Citroen's market share was 6.7 percent in Europe at the end of the first quarter, versus 6.5 percent at the end of last year.

Citroen is counting on new products, including the premium DS3 small car it launched in March to offset the market decline.

"We have taken 28,000 orders for DS3 since its launch, when we had imagined a figure of 50,000 cars in the year as a whole, so we're clearly above what we imagined in terms of volume," Banzet said.

Chinese ambition

Citroen is banking on strong growth in China, which last year overtook the United States as the world's largest auto market.

The group as a whole wants to grab 8 percent of the Chinese market and Banzet said an equal share in sales between Peugeot and Citroen would be a reasoanble forecast.

PSA has a joint venture in place with Chinese carmaker Dongfeng Motor and is discussing another venture with the parent of Chongqing Changan Automobile Co.

Discussions about the Changan partnership were still taking place but the agreement should cover areas that are complementary to the Dongfeng partnership, Banzet said.

"(Talks) could lead to the creation of a second joint venture in China which would aim not to compete with the current one, so to have complementary product ranges -- in particular light commercial vehicles, since for the moment we don't have light commercial vehicles in China."

Citroen's sales in China almost doubled in the first quarter to 58,000 cars, thanks to the success of the C4 family, which inlcudes a sedan designed specifically for the Chinese market.

Citroen has set itself a target of delivering 220,000 cars in China this year.

By comparison, Volkswagen delivered 620,500 units in China in the first four months of 2010. BMW said last month it expected to sell 120,000 vehicles this year in China.

Electric car

Citroen, like its sister brand Peugeot, is introducing an electric car -- the C-Zero -- to Europe at the end of this year. The C-Zero, and Peugeot's iOn, are both based on partner Mitsubishi Motor's iMiEV.

Over 8,000 drivers have signed up for a test-drive or to pre-order the C-Zero on Citroen's website, Banzet said. Most of these were individuals, but when the car is introduced, companies are expected to account for 90 percent of sales.

The cars will be imported from Japan to begin with, Banzet said, but he did not rule out production elsewhere in the future. "For the moment, the Peugeot and Citroen versions are made in Japan. I am indeed saying 'for the moment'," he added.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100527/ANE/305279973/1131/emailblastANE02#ixzz0pEE38ynX

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