PARIS - In a change of strategy, PSA has taken control of its partner in Argentina, Sevel.
Last August, PSA bought 15 percent of Sevel for $35 million. Last week, it bought another 35 percent plus one share from its partner, the Francisco Macri family, for an unconfirmed $40 million. The Macri family will retain a 28 percent stake. The other 22 percent is held by undisclosed shareholders.
Since Jean-Martin Folz became chairman of PSA/Peugeot-Citroen, he abandoned joint ventures in Guangzhou, China, and Bombay, India, where PSA held minority stakes and business was bad.
Now he has moved to control the Argentine business, before it gets any worse. Last autumn, when PSA bought 15 percent, it said it did not need more.
But 'customs change with the times,' said Frederic Saint-Geours, Peugeot brand director. 'PSA needs to control its different Mercosur operations.'
This will be the case with Peugeot-Citroen do Brasil, which will operate a plant in Porto Real, Brazil.
Saint-Geours will probably become chairman of Sevel. Luis Ureta, Peugeot's director for Mercosur, will be the general manager. Top executives for manufacturing, sales and purchasing were already Peugeot people.
PSA wants to restore its position in Argentina.
Market share was 13-15 percent a few years ago, but in 1997 it dropped to below 9 percent, and Sevel lost money. Sevel sold 29,020 units, for 8.7 percent of the Argentine market.
Sevel's net loss was $126 million in 1997 on sales of $700 million. 'Half of the loss can be explained by non-recurrent events, including the layoffs of 1,200 people last year,' said Saint-Geours. Sevel accountants, however, said the total cost of the layoffs was $135 million. PSA expects Sevel to return to profit in 1999.
Ureta plans several major expansions. The dealer body, currently 90, should expand to 120 by the end of 1999. New models will be added to Sevel's Palomar plant, near Buenos Aires. Capacity is 140,000 units, but in 1997 it built just 41,000 units of the 306, 405, and 504 sedan and pickup.
The Peugeot Partner and Citroen Berlingo commercial van will be launched in September, followed by the new 206 supermini in 1999. The Citroen Xsara may be added.
Until now, Sevel has been a Peugeot project, but Peugeot and Citroen are beginning to mingle.
Peugeot expects to sell 65,000 cars in Mercosur in 1998, including 50,000 in Argentina, 13,000 in Brazil and 2,000 in Uruguay. The forecast for Citroen is 10,000 units.
In 2003, PSA plans to sell 230,000 cars in Mercosur: 170,000 Peugeots and 60,000 Citroens.
Joe Vieira contributed to this report