Costs force Peugeot to leave the West behind

Click to follow
The Independent Online

Peugeot Citroen, Europe's second biggest car maker, disclosed yesterday that it does not plan to make any further major investment in new assembly plants in Western Europe because production costs within the eurozone are prohibitive.

Peugeot Citroen, Europe's second biggest car maker, disclosed yesterday that it does not plan to make any further major investment in new assembly plants in Western Europe because production costs within the eurozone are prohibitive.

The announcement, on the opening day of the Geneva Motor Show, came as the French automobile group formally unveiled the first models from the new factory it has built in the Czech Republic in partnership with Toyota of Japan. Manufacturing costs at the €1.3bn (£890m) factory in Kolin are 60 per cent of those at Peugeot's French car plants.

The Kolin plant will produce 300,000 cars a year - 100,000 each for Peugeot, Citroen and Toyota. The factory came in below budget with the help of a €200m grant from the Czech government. The car, a compact model, will be called the Peugeot 107, Citroen C1 or Toyota Aygo. More than 90 per cent of the components in the cars will be common to all three makes. The Peugeot version will sell for about €8,500.

Peugeot plans to raise its total annual output from 3.3 million cars to 4 million and a large part of this growth will come from production outside its traditional Western European assembly plants. Jean-Martin Folz, the chief executive of the French car maker, said: "We are not considering any further greenfield sites in Western Europe. We are looking outside Western Europe for extra capacity."

M Folz stressed Peugeot's move eastwards did not mean its Western European plants would be starved of any new investment. But this will be limited to replacement of existing models.

The move into Eastern Europe is part of a growing trend. Renault's new compact car, the Logan, will be manufactured in Romania.

Peugeot delivered some limited relief to workers at its Ryton car plant in Coventry by saying production of the 206 model would continue for a further five years, subject to market demand. But beyond that there is no certainty that Ryton will remain open and no new model earmarked for the plant.

Comments