PARIS (Reuters) -- PSA/Peugeot-Citroen posted a 3.2 percent increase in third-quarter revenue today as recovering European demand shielded the carmaker from the worst of a slowdown in China sales.
Revenue rose to 12.4 billion euros ($13.7 billion) in the three months ended Sept. 30, PSA said in a statement, defying a slide in vehicle sales volumes, down 4.3 percent globally and 17 percent in Asia.
"The important thing is that our solid growth is driven by key elements of our sales and product strategy," Chief Financial Officer Jean-Baptiste de Chatillon told reporters, citing a net price increase of 1.2 percent in the quarter.
Revenue at PSA's core automotive division rose 1 percent to 8.05 billion euros.
CEO Carlos Tavares is seeking to reduce PSA's reliance on Europe for more than 60 percent of its car sales. But that dependence served the company well in the last quarter, with sales in its home region up 6.1 percent.
The carmaker reiterated mid-term targets, including an operating margin of 2 percent in 2018 for its automotive division. PSA also raised its full-year European market growth forecast to 8 percent from 6 percent.
Like many of its mass-market peers, PSA is also struggling with collapsing demand in South America where sales volumes have tumbled 23 percent and Russia, where deliveries are down 46 percent.
Helped by Chinese carmaker Dongfeng Motor Corp., which has a 14 percent stake in PSA, the French automaker aims to expand sales outside Europe. The company posted its first annual operating profit in three years in 2014 after shutting a plant, cutting jobs and freezing pay.
Tavares's Back in the Race turnaround plan for PSA involves restructuring South American and Russian operations, streamlining the group’s product offerings while adding new models at its new DS premium brand.
The automaker's performance also reflected an 8.3 percent sales increase at 50.8 percent-owned parts maker Faurecia, which published quarterly numbers on Oct. 14.
In the wake of the Volkswagen emissions scandal, PSA faces a challenge in adapting to a shift in demand from diesel to gasoline engines, particularly in France, where policymakers are increasingly hostile to diesel, Chatillon said.
Diesel vehicles, which command higher prices, fell to 65 percent of PSA's European sales in the quarter, from 67 percent a year earlier, even before the Sept. 18 revelations of VW's diesel test cheating had time to affect demand.
The costs of cutting diesel production and ramping up gasoline engine output could put a dent in profitability "that we'd have to compensate in terms of pricing," the CFO said, without giving detailed forecasts. "But we have the capacity."
Bloomberg contributed to this report