Peugeot increases profits to pounds 30.5m

Peugeot Motor, the Coventry-based car maker, increased its profits sixfold to pounds 30.5m last year as production reached record levels and its share of the UK car market rose, writes Michael Harrison.

The profits compare with the pounds 74m that the entire Peugeot group earned in 1996 and help explain why the French parent company delivered a vote of confidence in its UK operation by approving a pounds 100m investment in a new model this month. The car, a replacement for the 205, will go into production at Coventry late next year alongside the 306.

The strength of sterlng against the French franc helped Peugeot to sell more cars last year with UK sales rising by 10,000 to 153,242. But Peugeot said the main factor behind the pounds 30.5m profit - its highest since 1991 - was the improved competitiveness of the Coventry plant. Richard Parham, Peugeot's managing director, said he expected to increase sales further this year against a background of modest growth in the UK car market. Production is expected to reach 90,000 against 85,751 last year - of which just under one-third were exported.