LUCA CIFERRI

Germans get positive endorsement; PSA looks poised to surprise

Luca Ciferri is Editor of Automotive News Europe.Luca Ciferri is Editor of Automotive News Europe.
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On the eve of their massive domestic auto show, German automakers received another strong endorsement, this time from the Fitch Ratings agency, which might be underestimating PSA/Peugeot-Citroen's potential for a strong rebound.

In a report released today, Fitch said that German carmakers remain better positioned than their European peers.

No one can argue with Fitch's view that BMW Group, Daimler AG and Volkswagen Group continue to demonstrate all the attributes needed to earn a solid investment-grade rating. The Germans have a strong market shares in key global markets and their finances rebounded quickly and strongly from the crisis.

When assessing the weaker southern European players, Fitch found France's Renault to be better placed than domestic rival PSA and Italy's Fiat Group.

Renault's performance has been relatively resilient since the 2008-2009 global economic downturn. The automaker may get upgraded if it can sustain positive automotive profitability in the foreseeable future and its operating margins trend toward 3 percent, Fitch said.

Fiat's and PSA's core European automotive operations have been losing money for several years and both groups' key credit metrics are extremely weak. They have both lost significant market share in Europe and neither company has managed to recover from the latest sector crisis, Fitch noted.

The view of the future for PSA and Fiat looks very different from the Frankfurt show floor, with PSA's brands seemingly on the rise and Fiat's brands heading in the opposite direction.

Peugeot will launch its crucial new 308 compact hatchback. Citroen unveils a near-production-ready concept, the C4 Cactus, which heralds a new market positioning for its future volume models, as well the Grand Picasso compact minivan.

Alfa Romeo, Fiat and Lancia are responding with nothing more than additional versions, special series and mildly updated models. Said plainly, there is nothing new and exciting for the three Italian automakers.

The bottom line is that – at least on the new product side – PSA looks to be in much better position than Fiat to benefit from a stabilization of the European market.

You can reach Luca Ciferri at lciferri@crain.com.

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