A plan of "reconstruction" of PSA Peugeot Citroën in Latin America is underway to replace the automaker back to the path of profitability in the region over the next three years. The strategies range from advances in nationalization of cars in order to reduce exposure to exchange rate on imports of parts, the readjustment of the "structures" to a smaller market, through more aggressive presence in the premium segment with the DS.
The last two years have been difficult for the company in the region, mainly in Brazil. In 2012, she suffered loss of r $ 381,7 million in the country and in 2013 the losses rose more, reaching R $ 2.64 billion.
In granting an interview to Brazilian journalists during the presentation of the Paris Motor Show to the press, the Portuguese Executive Carlos Tavares, President of the group, admitted that it will be difficult to get back in the black this year. He added, however, that went on a mission to the automaker's subsidiary: present profit in the region until 2017.
Among the first structural adjustments made by the company, PSA closed the third shift of production at the factory in Puerto Real (RJ) as a result of the drop in exports to Argentina, combined to the fall in sales in Brazil. The measure led to the closure of more than 600 vacancies in PSA production lines in the country.
Tavares gave signs that the cuts may not stop there. "If the market consume less automobiles, we will have to make adjustment of our structures so that the company can survive". "PSA has paid very high cost for having forgotten that profitability is essential to our survival. We cannot continue to practice our business with rules of the past. "
The Executive said that the two marks must improve communication with the Brazilian consumer and added that the group will work on local integration to be more parts produced in Brazil and Argentina, thus reducing the dependence on imports and, as a consequence, the exchange rate risk. According to Tavares, if the company succeeds in finding local competitive costs, this increased nationalization of cars could help profit margins.
The market situation, with indentation of 9% in the consumption of vehicles in Brazil, over the crisis in Argentina, makes it more difficult to execute the plan of reconstruction. "I hope that the countries of Latin America are conditions for which the index of confidence of its consumers can revive the economy," said global President.
Such a situation, said Tavares, weighs against new investments in Brazil, which for lack of competitiveness can lose projects for other markets. "Our business plan has to respect criteria of profitability and, as the potential of the company's financing is limited, if any sign that is not profitable to invest in Latin America, this money can go to China, Russia, Europe or another part of the world where the return on investment is better," said the Executive, adding that the region needs to present the perspective of growth and economic stability to attract more investments.
Tavares, on the other hand, reported that the company is evaluating develop in Brazil an exclusive network of dealers of luxury brand, the DS, as long as there are dealers interested. Today, the automaker matter three models of the brand in Brazil, but the goal is to double this number to six in three or four years. According to Tavares, premium cars have 5% profitability higher than the other lines. The Brazil, with nearly 4 million cars already sold, it is the largest market of the DS outside of China and Europe, where these vehicles are produced
If you want to strengthen participation in sophisticated ranges, Tavares disposes of the most popular segments. "Before the crisis, it was very difficult to make profit with these cars. Obviously after the crisis is much worse. I bet there is no automaker making profit with cars in the segment to [entry vehicles] because prices are extremely low and conditions increasingly difficult. "
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