PARIS (AP) - The new head of PSA Peugeot-Citroen, Christian Streiff, on Wednesday detailed a major turnaround plan to restore the French automaker's sagging profitability, and said he hopes for results this year.
The four-year recovery plan includes an effort to bring down costs, bolster weak sales through the introduction of fresh vehicles, and improve quality and customer service.
Peugeot-Citroen's fortunes have ebbed in recent years as a weak product lineup and fierce competition from Asian manufacturers have caused its share of the key European market to fall to just over 13 percent, from a record of 15.5 percent in 2002.
The turnaround program, known as CAP 2010, aims to regain that market share, Streiff said. Peugeot-Citroen is Europe's second-largest car maker by sales.
Its net profit plunged to $237 million in 2006 while the operating margin of its automobile division - a closely watched indicator of the company's financial health - fell to 0.6 percent from 2 percent in 2005.
Streiff said the recovery plan aims to reduce the company's fixed costs by 30 percent by speeding up the development time for new models and improving operations not directly related to production.
The 30 percent cost reduction is in addition to the annual $807 million decrease in overhead that the company has been achieving on average in recent years.
Peugeot-Citroen recently announced a plan to reduce its work force in France by 4,800 employees this year, offering incentives to avoid forced layoffs.
The plan also calls for increased reliance on suppliers located in lower-cost countries, technical savings in series production, and re-engineering vehicles.
Improving quality will be another focus, Streiff said. The company hopes to halve its warranty costs and reduce by one-third the frequency of problems with models after they have been introduced.
Streiff, who took over in February, said one of the goals of the plan is to put the Peugeot and Citroen brands among the top five volume car makers in terms of quality, services and product by 2010.
To improve its product lineup, Peugeot-Citroen is stepping up the pace of new model introductions, with 41 to be brought to market between now and 2010, six more than had been originally planned. The company plans to introduce 17 models in 2008.