Weak Europe takes toll on Peugeot sales

Wed Jan 9, 2013 10:07am EST
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By Laurence Frost

PARIS (Reuters) - PSA Peugeot Citroen's (PEUP.PA: Quote) global car sales fell sharply in 2012 as the struggling French automaker recorded its worst European performance in years.

The company's 16.5 percent drop in worldwide sales last year also reflected its withdrawal from Iran.

The car industry has been battling a sales slump in Europe, where fallout from the euro zone crisis has hit consumer demand. Peugeot's sales outside the region have not grown quickly enough to compensate.

The European car market is at its lowest in close to two decades, and Peugeot's sales performance in the region in 2012 was the worst in at least the same period. The company forecast a further 3-5 percent decline for the market this year.

"If this view of the world should turn out correct, we see little reason why the financial situation at PSA should improve at all during the year," Credit Suisse analyst Erich Hauser said.

Paris-based Peugeot is shedding assets, cutting 10,000 jobs and closing production capacity to stem mounting losses. Chief Executive Philippe Varin has warned that it won't return to profit before 2015.

The company said its global sales volume dropped to 2.97 million vehicles in 2012 from 3.55 million a year earlier, weighed down by a collapse in southern Europe, where Peugeot is heavily exposed.

"PSA Peugeot Citroen has felt the full force of the sustained decline in Europe's automobile markets," brands chief Frederic Saint-Geours said.   Continued...