Yahoo Finance Europe's Peugeot speeding back into American market
French car manufacturing giant PSA Group — which sells Peugeot, Vauxhall, and Citroën vehicles — is preparing to take on Ford and GM on their home turf.
The company announced plans on Tuesday to re-enter the North American market after a roughly three-decade absence, with new models arriving in the US and Canada over the next few years. Peugeot originally stopped sales in North America in 1991.
“The group’s aim is to increase its sales outside Europe by 50% by 2021,” the company said in a written statement.
Currently, about 80% of PSA Group (UG.PA) sales are made in Europe.
However, the threat of new US car tariffs would prove deeply problematic for the company. US President Donald Trump is expected to announce in the next three months that the country will introduce new tariffs as high as 25% on international car imports.
“The [North American launch] date depends on the clarification on customer duties,” a PSA Group spokesperson told Yahoo Finance UK. Currently, European car imports to the US face a tariff of just 2.5%.
PSA Group also announced plans to launch the Citroën brand in India and the Opel brand in Russia, as well as further expand international sales of its niche DS vehicles.
The international expansion push comes as the company reported record-setting sales in 2018 that were up 19% compared to the previous year. The company made €74bn (£64bn, $84bn) last year and sold 3.9 million cars. Operating profit was also up 43% to €5.7bn.
The results got a boost from the brands Opel and Vauxhall, which PSA Group bought off GM (GM) for €2.2bn (£1.9bn, $2.5bn) in August 2017. The company quickly turned around these European businesses by cutting costs and focusing on selling more profitable vehicles. This success comes after GM had failed to make a full-year profit in Europe since 1999.
However, investors were unimpressed by the latest full-year results, which came in slightly below expectations. Shares in the company dropped by about 4% in morning trading, making PSA Group the worst performer on the CAC 40 index (^FCHI) in Paris on Tuesday.
