Peugeot's big gamble

27 Jul 2004 By Marianne Brun-Rovet

Success isn’t certain in the competitive European market. But it’s encouraging for Peugeot that Renault’s and VW’s new cars are struggling. Of course, there’s always the risk that Peugeot’s new models will flop too. But at least its finances are sound and it is cheap.

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PSA Peugeot Citroen reported a 22% drop in firsthalf profits as it cut prices on older models to attract buyers.

But Europe's secondlargest carmaker by sales beat forecasts and said it expected profit to increase in the second half thanks to new models launches.

Net profits declined to E681m or E2.81 euros a share, compared with E869m or E3.54 a share a year earlier, because of a 'more aggressive competitive environment, at a time when the group could not yet leverage its new models to resist the increased price pressure,' Peugeot said. Sales rose 4.3 per cent to E28.9bn.

The company began selling the 407 midsize sedan in April, while the 1007 small van and C4 hatchbacks will reach dealerships later this year.

The company said it was sticking to fullyear operating profits forecasts of close to last year's E2.2bn.

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