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PSA to Introduce New Flexible Production System; Increase Customization

Executive Summary

The auto maker is increasing the number of models it will build in Europe by entering five new segments in the next four years.

PARIS – PSA Peugeot Citroen plans to institute a new PSA Production System to make plants more flexible in handling the auto maker’s next generation of platforms, CEO Christian Streiff says in explaining product strategy for the 2010-2015 timeframe.

At the same time, PSA will increase the personalization of vehicles after they leave the factory. Frederic Saint-Geours, general manager of Automobiles Peugeot, says the customization will not be done at dealerships but in mini-plants to be established at the distribution hubs.

This will improve quality because factories will be able to build vehicles with a maximum of standardization, while workers at the distribution centers will add features that will customize a car according to the buyer’s specifications.

These will include details such as decal graphics, custom cupholders and glove-box organizers.

PSA has said it will increase the number of models it will produce in its European factories by entering five new segments in the coming four years.

At the same time, it intends to eliminate facelifts, the mid-cycle changes meant to freshen an aging model.

Saint-Geours indicates the lifecycle of specific models will remain at about six years, because “four-and-a-half or five years is too short.”

Generally, volume increases during a model’s first two years in the market and then tails off, he says. If the car is a hit, sales hold up longer.

During the 2002-2006 period, PSA restyled seven cars. For 2007-2010, it will refresh only one.

Streiff says the auto maker will be able to increase the number of models it offers by decreasing development time. “We have averaged five years in development when starting with a blank sheet,” he says, “and we want to arrive at four years.”

He mentions only one “blank sheet” platform – that for entry-level vehicles – and Saint-Geours says it will not be ready before 2010.

PSA has five assembly plants in France and four in Europe, as well as two in South America, plus joint-venture facilities with their own production systems in France, Italy, Czech Republic and China.

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