PARIS (Reuters) -- PSA/Peugeot-Citroen's prospects may be brightening as Europe emerges from a six-year market slump, but new CEO Carlos Tavares still faces long odds as he prepares to present his recovery plan on Monday, analysts said.
Among European automakers, PSA arguably has the most to gain from a demand recovery underway in the region, where it still sells almost 60 percent of its global production.
But unlike domestic rival Renault, where Tavares previously served as chief operating officer, PSA's Peugeot and Citroen brands lack budget models to tap a boom in low-cost cars and are struggling to lift pricing on their core range.
"Shareholders do need to ask themselves whether this transition can be successful," said Arndt Ellinghorst, an autos specialist at brokerage International Strategy and Investment. "So far PSA has been a great way to play the market recovery in Europe," Ellinghorst said in a note. "But for more material upside to the share price we need to see evidence of PSA's DNA changing."
After losing more than 7.3 billion euros ($10.1 billion) in two years, PSA struck a rescue deal in February to sell 14 percent stakes to the French government and China's Dongfeng Motor Group as part of a 3 billion euro cash infusion.