Jean-Martin Folz has just com pleted his first year as chairman of PSA/Peugeot-Citroen. He is reshaping the company, pushing to merge Peugeot and Citroen into a single entity.
What is the state of PSA a year after you took over?
We have three basic challenges for PSA: to return to growth, profitability and to encourage innovation.
We have made some progress. We are in the final process of merging all the non-marketing, non-commercial activities of Peugeot and Citroen. We are bringing together the industrial and R&D operations. We have also launched significant negotiations with the unions. As a result, Automobiles Peugeot and Automobiles Citroen will merge into one company.
How can you highlight the differences between Peugeot and Citroen?
We want to have 75 percent of our vehicles based on three common platforms within four years. Peugeot and Citroen already have a large amount of freedom to develop their own products. We want to have two broad-line brands, each with a strong personality that can complement the other. In my view, a broad-line brand can offer products which are interesting for 75 percent of the new-car buyers in Europe.
We will continue to have different cars for the two brands. We will not do something like the 106 and the Saxo together again.
How important is the luxury segment to PSA?
Our brands are not legitimate in the high-luxury segment, but they can compete as status cars. The Peugeot 406 coupe is a good example of this. It's part of our broad-line brand strategy. That means we'll produce successors to both the Peugeot 605 and the Citroen XM.
We can find a substantial market share in this segment, at least large enough to make reasonable profits.
PSA must improve its plant productivity. Do you have too many plants in Europe?
The overcapacity issue is just nonsense, the way it's usually put. Nobody knows exactly the real capacity of a plant. The situation is very different from one plant to another in Europe. Some plants work three shifts a day, six days a week; others work two shifts a day, five days a week, and so on. You cannot produce any car in any plant. Plants are specialized. It's one reason why so far there has not been many plant closures (in Europe). Most of our plants can produce more; it's the same situation for our competitors.
Moreover, we have increased our production in 1998. Considering the success of the Peugeot 206, we'll increase production again next year. We're not facing any decision to close a plant.
How much are you concerned by the removal of quotas on Japanese imports in 1999?
Since 1991, the Japanese have been selling less than their quotas. Quotas are not a limitation to Japanese expansion.
Why did you set up a joint venture with Ford to produce diesel engines?
Most European manufacturers were thinking about a new family of small diesel engines. Everyone thinks it's better to cooperate if possible. To reach such an agreement implies not only the willingness to cooperate, but the sharing of similar views about the characteristics of the engine and more or less the same schedule.
It happened that these three conditions fit Ford very well.
Could you do other things with Ford?
Yes, we would be very pleased if we find other possibilities. PSA is a worldwide champion for lasting cooperation. We have been cooperating with Renault for 30 years. We also have a long record with Fiat, with which we share minivan production. However, I don't think Ford could join our minivan platform (after the recent Galaxy/Sharan break with Volkswagen).
What about PSA in other parts of the world?
To expand outside Europe is very important to us. We sold 84 percent of our cars in Europe last year, and only 16 percent elsewhere. We have been much criticized for this, but when you look at the present crisis (in the Asia-Pacific region) it might be an advantage more than a disadvantage. But I believe we should increase our sales outside Europe. In the past, there were people at PSA specifically in charge of the non-European business. Today all of us are in charge, and it's a priority for us.
Is Asia still part of your strategy?
We don't have an Asian strategy, but selected targets. China, Malaysia and Iran are our three targets.
Do you have any thoughts about the market in the USA?
Nobody can forget the market in the USA. But considering the necessary investment, the USA is not a priority for us today.
Jean-Martin Folz was interviewed at PSA headquarters in Paris by Automotive News Europe editor Richard Johnson and staff reporter Stephane Farhi.