What do you think is famous in France apart from the Eifel Tower, the magnificent Alps and the much regarded “French Kiss on Eifel Tower” moment? The long comfy, status symbol – Limousine. Yes, the Limo originated from France.
We at AutoGuru somehow manage to connect anything with automobiles, don’t we?
Today we will be talking about Groupe PSA, the French automotive biggie, which is the 2nd largest manufacturer in Europe and the 11th largest in the world.
Peugeot originally started in the year 1810, which is 80 years before it even produced automobiles as a player in the metal industry and then gradually expanded in producing cycles.
The family that runs Peugeot became interested in the world of automobiles after meeting Gottlieb Daimler, and hence in the year 1889, the first Peugeot “automobile” was produced, a three-wheeled, steam-powered vehicle.
Peugeot S.A. in December 1974, acquired a 38.2 percent share of Citroën, which then started their epic journey in the European automotive market. They raised their interest in the then bankrupt company to 89.95% in April 1976, thereby forming the PSA Group (short for Peugeot Société Anonyme) and becoming PSA Peugeot Citroën.
Since at this period Citroën had two popular new models on the market (the GS and CX), Peugeot was usually cautious with its own finances. The PSA venture was doing well in the domestic market as well as foreign markets, it saw financial success from 1976 to 1979.
In late 1978 PSA acquired the struggling Chrysler Europe from the distressed US parent group, leading to losses for the consortium from 1980 to 1985.
PSA went on a spending spree which in-turn created severe financial problems; from 1980 to 1985 PSA lost a lot of capital as well as resources. However, there were some bright spots: primarily due to the popularity of the Peugeot 205, one of their best-selling models and amid the waning of Talbot sales, for the first time in 1983, PSA exceeded Renault in domestic French market sales. This was a huge milestone for Group PSA.
Global Economy Crisis and Fall (2012-2014)
As the stock markets over the globe crashed and the world went through an economic crisis, PSA too faced a lot of hurdles in the journey.
PSA announced in February 2012 the formation of a major partnership with General Motors (GM), as part of which GM became the second-largest shareholder of PSA, with a 7 percent stake, after the Peugeot family
In July 2012, a union official said that, under a permanent and provisional deal, PSA Peugeot Citroën will slash 10 percent (8,000-10,000) of its French workforce of 100,356 workers. The decline in employment was higher than originally announced.
General Motors announced in December’13 that it was selling its 7 percent stake in PSA Peugeot Citroën as their wavelengths didn’t match.
In 2014, in a financial rescue operation, Dongfeng Motor Company, the Chinese affiliate that manufactures PSA cars in China, and the French government each took a 13% stake in PSA, cutting the share of the Peugeot family from 25 percent to 14 percent.
Rapid growth and expansion (2014-present)
Following the purchase of each share in Groupe PSA by Dongfeng and the French government, different cost-cutting initiatives at the firm turned its fortune around and steadily lowered the debt of PSA until the company started to make a profit starting in 2015.
In February 2017, PSA announced a 50:50 joint venture with CK Birla Group, the owner of Hindustan Motors, to market Peugeot, Citröen and DS vehicles in India and to purchase Hindustan Motors' Ambassador brand at the cost of INR 80 Crore.
This will be the first time PSA has been selling vehicles in India in more than twenty years. This joint venture can be marked as the “Gateway to India” for Groupe PSA.
The same month, PSA after a lot of back-and-forth decisions finalized the deal with General Motors to buy out Opel and Vauxhall, adding another jewel in the Groupe PSA crown.
Groupe PSA announced its intent to merge with the giant Fiat Chrysler Automotive (FCA) in October 2019 on a 50-50 all stock balance. FCA and PSA announced in December 2019 that they had agreed to the terms of binding a $50 billion merger.
Both the giants in July 2020 announced that the combined organization would be known as “Stellantis,” derived from the Latin word 'Stello' meaning 'brighten with stars.'
This merger was approved by both PSA and FCA shareholders, just 5 days before this article, i.e., 4th January 2021 and the process is scheduled to complete by 16th January 2021.
As the PSA-FCA merger is on the verge of completion, the combined business will have 14 brands under its umbrella with Peugeot, Citroen, Fiat, Jeep and others are competing in the mass market segment. Whereas Alfa Romeo and DS in the premium or luxury side of the market.
DS will play the card of "French-style luxury" with its SUV DS7 and DS3 Cross back manufactured in France and its DS9 flagship sedan made in China to compete with German models that dominate the market. It gets 90% of its revenue from Europe and planned to have 450 dealerships operational by the end of 2020.
“The future of a brand hinges on its credibility and success. If one looks at what DS did in 2019, obviously the future of DS is not an issue,” said Beatrice Foucher, CEO, DS Auto, in an interview with Reuters.com.
DS seeks to compete with Mercedes and BMW and focuses on SUVs and a luxury sedan. Groupe PSA plans to enter more markets equipped with the DS luxury brand.
As per the current scenario, Stellantis will have a lot of potentials as the two biggies share their capital and resources with each other and try to conquer the market. Who knows, we might see a DS SUV with the Hellcat engine :p.