PSA Retunes China Strategy

PSA Group needs a “new business model” in China that focuses on significant cost cuts and a wave of new SUV/crossover vehicles to help revive sales, according to CEO Carlos Tavares.

Last year China’s car market expanded 15%. But PSA’s sales shrank 16% in 2016, and they plummeted nearly 50% in January-February.

Reuters attributes PSA’s woes on a model mix that has too many sedans and hatchbacks and not enough SUVs to match market demand. Tavares agrees that more crossovers “are a must” in China. He also concedes that PSA has struggled to meet a goal of lowering its production costs in China by 10% per year.