PSA Retools China Strategy

PSA Group aims to correct misjudgments that caused its sales in China to plummet 48% over the past three years, Automotive News Europe reports.

China’s demand for PSA’s cars surged to 734,000 units in 2014, creating the company’s largest national market. But outdated models, a lack of China-specific features and a dearth of SUV/crossover models quickly reversed the company’s success. Slumping sales and financial losses just as the country’s passenger-vehicle market expanded 25%.

Now CEO Carlos Tavares vows to reverse those mistakes, bolster PSA’s sales network and reduce production costs in China. Analysts describe 2018 as the company’s make-or-break year.

Leading PSA’s efforts in China is Carlos Gomes, former head of the company’s Latin American operations. He moved into his new job on Feb. 1 as the region’s third CEO in less than two years.

Gomes’ challenge will be to quickly gain sales in a passenger car market that is expected to expand less than 1% this year from 4% in 2017. PSA has said it will introduce 20 new models in China by 2021 under its Push to Pass business plan.