France's PSA Peugeot Citroen, Europe's second-biggest carmaker, unveiled plans today to slash its fixed costs by 30 per cent as part of a restructuring plan.
PSA Peugeot Citroen would maintain its plan for savings of €600 million a year, a company spokesman said, confirming comments made to newspaper Les Echos by Chief Executive Christian Streiff.
In the European market, PSA ranks behind German leader Volkswagen AG in terms of sales. PSA has suffered from thin operating profit margins - 2 percent in 2006 - and it took a battering after three profit warnings in little over a year.
The company has launched a restructuring plan called "Cap 2010" and plans to launch six extra models between now and 2010, bringing the total of new models it aims to put on the market to 41.
PSA has already announced plans to cut 4,800 jobs through voluntary redundancies in France in 2007, out of some 122,000, after a hiring freeze in 2006 and the closure of the Ryton plant in England.
Mr Streiff told Les Echos that PSA did not plan to close factories and added the company would work hard to lower its purchasing costs. Asked whether PSA could merge with another carmaker, Mr Streiff said the company's priority for the moment was to focus on organic growth and boosting its profitability.
PSA shares closed at 61.31 euros yesterday. PSA trades on a 2009 price earnings multiple of around 9 times compared to roughly 7 for Renault and 11 for Daimler and Volkswagen.