Streiff said “Vigo is one of our top plants and we are very happy with its reduced costs and increased production,”.Costs at the plant declined by 10% and output was up by 20% in 2007.
Streiff highlights the supportive role of major suppliers in helping Vigo’s costs come down. “We have developed a particularly close relationship with 100 suppliers to Vigo, and they have helped the plant to become more competitive, develop greater flexibility and increase capacity as well as improve quality.”
PSA is hoping to grow global unit sales in 2008 from 3.43m in 2007 to between 3.55 and 3.65m units. (Target of CAP 2010 is 4 million vehicles)
That might look modest, and it is when you consider that PSA should see a good volume gain in emerging markets. Volume growth in Europe won’t be huge. Making more money on sales – in order to be on route to that 6% operating margin – is the really big challenge.
But Streiff has already made very good progress on cutting costs and PSA grew volume sales in 2007 (up 3.8%). Unlike some others, PSA is not exposed to the weak dollar in the US. Streiff made it very clear that there is zero interest in entering the US at present.
The PSA operating margin for 2007 may well come in as a pleasant surprise. However, maintaining momentum in 2008 will not be easy.