Peugeot Citroën down after 13% decline in sales

SHARES IN PSA Peugeot Citroën fell sharply after the troubled French carmaking group reported a 13 per cent drop in its first-half unit sales.

The company, among the hardest hit by the euro zone crisis, said it sold 1.62 million new vehicles and car assembly kits in the first half, compared to the 1.86 million it sold in the first half of 2011.

The share price movement also followed a report in France’s La Tribune newspaper – denied by Peugeot – that it had asked for a state loan to prop it up.

Peugeot was badly hurt in the first half by its exposure to European markets at the nexus of the debt crisis. It said demand for cars and light trucks had dropped sharply in three of its biggest markets in January to June: down 13 per cent in France; 22 per cent in Italy and by 13 per cent in Spain.

Peugeot said its overall European sales were down by 10 per cent for the period, due to an “unfavourable country mix”.

The French group is cutting at least 6,000 jobs and selling €1.5 billion of assets in order to cut costs and raise cash. Chief executive Philippe Varin has summoned unions for a meeting on Thursday at which he is expected to outline further cost and job cuts and may announce plant closure plans.

Philippe Bonnon, a socialist politician with links to Pierre Moscovici, the finance minister, told La Tribune Mr Varin had “asked for a loan” from the government, which would mean the state takes a stake in the firm. Mr Bonnin is mayor of a municipality in Rennes home to one of Peugeot’s plants.

Prime minister Jean-Marc Ayrault announced this week the government would soon unveil a plan to aid the French car industry, but gave no details.

Paris bailed out Peugeot and Renault with loans worth €6 billion in 2009. Peugeot sought to put a positive spin on its poor first-half sales by pointing to growth outside Europe and improved sales of higher-priced, higher-margin premium vehicles such as Peugeot’s RCZ roadster and Citroen’s DS line of cars.

The company said sales outside Europe accounted for 39 per cent of the total in the first half, up from 38 per cent in the first half of 2011 and compared with 29 per cent in the first half of 2008. – Copyright The Financial Times Limited 2012