New 301 Launched In Emerging Markets; Is It Too Late?
As Peugeot launched its cut price 301 for third world markets, investors were speculating losses this year could be a half a billion euros worse than previously expected.
The Peugeot 301 was launched in Turkey and will be rolled out progressively in Eastern Europe, Africa and South America. Peugeot-Citroen needs to dilute its dependence on Western Europe. The 301 is a stretched version of the 208 and designed to appeal to markets which demand roomy boots. The 301 is made in Vigo, Spain, and is aimed at middle-class buyers in emerging markets, a category above the Renault Dacia.
Investors might be thinking this is all a bit too late to bail out Peugeot-Citroen. Citi Research analyst Philip Watkins says Peugeot-Citroen’s operating loss will reach €1.5 billion in 2012, with a free cash flow burn of €2.8 billion. Cash burn will slow to €1.75 billion next year. This compares with a consensus a month ago that losses would hit up to €1 billion in 2012, with more red ink to come in 2013.
Peugeot-Citroen reported an operating loss of €662 million in the first half of 2012, compared with a loss of €92 million in the same period last year. Peugeot-Citroen has announced it would close the Aulnay plant near Paris in 2014 eliminating 6,500 jobs, and axe another 1,500 jobs across the organisation. It has sold assets worth €1.5 billion and launched a €1 billion rights issue. Last month the French government announced that it would guarantee up to a €7 billion loan for Peugeot-Citroen’s banking arm.
Last month, in an interview with Automotive News, ex-Valeo CEO Thierry Morin was asked his thoughts on Peugeot-Citroen, in the context of its alliance launched earlier this year with General Motors.
Late means wrong
“When you do everything right but too late, you do it all wrong,” Morin said.
It might be a bit harsh to dismiss Peugeot’s 301 as a good idea but a bit late.
After all, Volkswagen revealed last month it may launch a new low-cost sub-brand by 2015 to take on Renault’s Dacia and Nissan’s Datsun.
Neil Winton – November 15, 2012
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