Bloomberg News

Peugeot Boosts 308 Hatchback Production to Meet High Demand (1)

March 14, 2014

A Peugeot 308 Automobile Sits in Paris

A Peugeot 308 automobile, produced by PSA Peugeot Citroen, stands on display in the window of a car showroom at the company's headquarters in Paris. Photographer: Chris Ratcliffe/Bloomberg

PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, will increase production of the 308 hatchback after receiving 60,000 orders for the new model.

Peugeot will hire 600 people, including 450 on temporary contracts, to staff a night shift at a plant in Sochaux, France, to meet high demand for the model, which last week won Europe’s Car of the Year award at the Geneva auto show, the Paris-based company said in a statement today.

The hirings mark a possible turning point for Peugeot, which last year closed a factory in the Paris suburb Aulnay and has been working to eliminate 11,200 domestic jobs. The new Peugeot 308 beat six other vehicles, including electric cars from Bayerische Motoren Werke AG and Tesla Motors (TSLA:US) Inc. to take home the prestigious prize.

“It’s the first time I can remember that PSA is talking to the market about adding employment, rather than reducing employment,” Erich Hauser, a London-based analyst at International Strategy & Investment Group, said in an e-mail. “It shows that the company is starting to gain some traction on its new products.”

The market share of Peugeot and its sister brand Citroen in Europe narrowed to 10.9 percent last year from 11.7 percent in 2012, according to figures from the ACEA regional industry group. PSA’s share of industry sales expanded 0.2 percentage point from a year earlier in January, to 11.5 percent, as its 6.9 percent gain in deliveries exceeded the market’s 5.2 percent growth.

Additional Shift

The Sochaux plant currently employs about 10,800 under permanent contract and 600 temporary workers, spokesman Jean-Charles Lefebvre said by phone today. The last time the site hired workers was in 2011. The plant produces the 308, the 508, the 3008 and the DS5. The additional shift will increase daily production of the 308 by 180 vehicles to 1,563.

The 308 model, marketed as a compact car for urban families, will replace a version that went on sale in 2007, and is sold at a starting price of 17,800 euros ($24,700). It competes with Volkswagen AG’s best-selling Golf and Ford Motor Co. (F:US)’s Focus in Europe’s largest model segment.

Full-year deliveries of the former and current version of the 308 totaled 240,713 units last year, representing 16 percent of the Peugeot brand’s sales.

Peugeot, which racked up more than 6 billion euros in losses during the past two years, announced on Feb. 19 that it had reached an agreement with France and Dongfeng Motor Corp. under which they would each contribute about half the money for a planned 3 billion-euro capital increase in exchange for a 14 percent-stake each.

The founding family’s ownership in the carmaker will drop to 14 percent from the current 25.5 percent as a consequence of that deal. Former Renault SA (RNO)’s executive Carlos Tavares will take over as Peugeot’s chief executive officer this month, replacing Philippe Varin.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net Kim McLaughlin, Alastair Reed, Nick Leiber


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