PSA doubles profits and is ‘ready to grab opportunities’

February 24, 2017

PSA Group has announced a doubling of full-year profits, signalling the carmaker's revival from crisis three years ago, and reinforcing its efforts to buy General Motors’ (GM’s) European Opel-Vauxhall operations. 

Net income rose 92% to €1.73bn, with recurring operating income up 18% to €3.2bn, due to cost reductions. 

PSA chief executive officer Carlos Tavares previously said he would seek to grow PSA after restructuring the business. Chief financial officer Jean-Baptiste de Chatillon said:We are ready to grab opportunities.’ 

PSA has now accumulated €8 billion in free cash flow since 2013. Jean-Baptiste de Chatillon added: ‘[PSA can now] deploy this cash to make profitable investments and invest this money in the best interest of our shareholders.’ 

PSA's Tavares is looking to buy GM’s unprofitable Opel unit and to rally support for the deal, has pledged to governments and union leaders that he will secure jobs and turn the company around like he did with PSA. GM’s European operations have racked up more than $20 billion (€18.9 billion) in losses and have been in the red every year since 1999.   

The addition of Opel’s 1.2 million annual vehicle sales would help PSA boost its scale, with volume critical for cost-saving economies of scale in the mass-market car sector. The merger would make PSA-Opel the second best-selling carmaker in Europe, with a 16% share, ahead of Renault’s 10% and behind Volkswagen’s dominant 24%. It would also help PSA spread the cost of investments in emerging automotive fields such as autonomous cars, and in the development of cleaner engines – necessary to meet ever stricter EU emissions standards. 

However, PSA is not only interested in boosting its core European operations. 

PSA has said it wants to export Opel cars globally after the General Motors deal, which could see it competing directly against GM in the US market – in which PSA currently does not operate. 

The company is also looking to expand in Asia with the acquisition of struggling Malaysian carmaker Proton. 

Furthermore, it is looking to return to the Iranian market and also to India through joint ventures. 

PSA was rescued by the French state and Chinese carmaker Dongfeng Motor three years ago, after suffering heavy losses. 

While it was previously thought PSA’s Opel takeover deal would be completed by early March, PSA has indicated that the deal will take longer to finalise.

Also in News & Insights

UPDATE: News & Insights have moved to the Autovista Group website

March 31, 2017

Our regular automotive industry News & Insights are no longer being published on the Autovista Group Market Reports website.

Instead, you can now find the latest updates at our central Autovista Group website, home to our pan-European brands including Autovista, Eurotax, Glass's and Schwacke.

To stay up to date with rapidly changing market trends, we recommend signing up to our free Autovista Group Daily Brief which delivers our daily news stories directly to your inbox.

You can still find our in depth market reports here on the Autovista Group Market Reports site. Keep checking back as we have an exciting new report due to be launched shortly!

PSA to boost UK presence in the event of a ‘hard Brexit'

March 08, 2017

UK sales flat despite upcoming road tax hike, diesel demand plummets

March 08, 2017

UK new car registrations fell annually by 0.3% in February to 83,115 units according to the SMMT, driven down by weaker demand from individuals and companies. More noticeable, however, was the 9.2% drop in demand for diesels compared to February 2016, a steeper drop than the decline in Germany...