PARIS (Bloomberg) -- PSA/Peugeot-Citroen tripled its profit target with a program to roll out 26 new cars, eight commercial vehicles and a pickup truck as the French automaker seeks to solidify its recovery after a bailout two years ago.
PSA plans to generate automotive operating profit of 6 percent of sales by 2021, compared with its previous target of 2 percent in 2014's Back in the Race strategy, the company said today in a statement. The goal is better than the 5 percent margin posted last year.
"Based on our financial reconstruction, we will launch a global product and technology offensive," CEO Carlos Tavares said in the statement. "We will ensure PSA profitable organic growth."
Europe's second-largest carmaker after Volkswagen Group is seeking to build on years of restructuring that included shutting a plant, freezing pay and paring down its vehicle lineup. Those moves helped PSA reach earnings targets ahead of schedule, and Tavares aims to show the company can compete toe-to-toe with rivals through his new Push to Pass program.
The company is underscoring its renewed confidence by reinstating a dividend policy and plans a payout equivalent to 25 percent of profit starting this year. PSA last made a payment to shareholders in 2011, according to data compiled by Bloomberg.
The manufacturer's growth plan targets revenue increasing 10 percent by 2018 and an additional 15 percent by 2021. The strategy calls for one new car to be rolled out every year for each of its three brands, which include the mass-market PSA and Citroen nameplates and the upscale DS badge.
PSA also plans to push connectivity technologies as well as roll out seven plug-in hybrids and four electric vehicles.
Tavares's main challenge will be to find an answer for PSA's dependency on Europe, which accounted for 62 percent of its car sales last year. The market's decline to a two-decade low in the aftermath of the sovereign-debt crisis prompted a bailout by the French government and China's Dongfeng Motor in 2014, with each taking a 14 percent stake in the automaker.
While European auto demand has rebounded, the market isn't expected to recover to pre-crisis levels in the near future. That will put a focus on the French company's plans to expand in Iran, China and Morocco as well as develop the DS nameplate into a full-fledged luxury brand.
Although PSA is a major player in Europe, its global deliveries, which totaled 2.97 million vehicles last year, are small compared to its main competitors. French rival Renault sold 8.5 million cars together with its alliance partner Nissan, and VW Group delivered nearly 10 million autos worldwide in 2015.
PSA's relatively small size could be a handicap as emissions regulations and consumer trends push automakers to invest in technology for electric vehicles and autonomous driving. PSA spent 1.8 billion euros ($2.05 billion) on r&d last year. VW has invested about 4.4 billion euros annually in recent years on developing new vehicles.
The spending demands make PSA's ability to generate cash critical. The automaker said it will be maintain its "frugal" approach to development investment and keep "rigorous" control over production and fixed costs. The goal for its automotive operating margin is to average 4 percent between 2016 and 2018.