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PSA PeugeotCitroën profile

History, Strategy, Development and Production. Lighting and Driver Assistance at Peugeot and Citroën

May 6, 2008

TABLE OF CO

NTENTS

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TABLE OF CONTENTS

EXECUTIVE SUMMARY .................................................................................................................... 4

ABOUT THE AUTHOR ....................................................................................................................... 5

INTRODUCTION ............................................................................................................................... 6

1. HISTORY ...................................................................................................................................... 7

PSA ...................................................................................................................................................... 7

Peugeot ............................................................................................................................................... 8

Citroën ............................................................................................................................................... 10

2. HEADQUARTERS ........................................................................................................................ 12

PSA companies .................................................................................................................................. 12

PSA comprises several subsidiaries: .................................................................................................. 12

Executive Committee ........................................................................................................................ 13

Extended Executive Committee ........................................................................................................ 14

3. STRATEGY .................................................................................................................................. 15

Program: “Cap 2010” ........................................................................................................................ 15

Ambition 2015 ................................................................................................................................... 16

4. FINANCES .................................................................................................................................. 17

People ............................................................................................................................................... 17

Sales .................................................................................................................................................. 17

Results ............................................................................................................................................... 19

5. ENGINEERING AND INNOVATION .............................................................................................. 21

Budget ............................................................................................................................................... 21

Development ..................................................................................................................................... 21

PSA Strategy/Performances and Design ........................................................................................... 24

6. PRODUCTION ............................................................................................................................ 26

PSA has 15 production sites worldwide ............................................................................................ 26

TABLE OF CO

NTENTS

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PSA has 10 CKD assembly sites ......................................................................................................... 26

PSA has a policy of alliance with main partners ............................................................................... 27

PSA gives the priority to production in China, Russia and South America ....................................... 27

7. QUALITY, CUSTOMER SATISFACTION ......................................................................................... 29

PSA has a relatively poor public image of Quality ............................................................................ 29

8. PSA CYCLE PRODUCTION PLAN .................................................................................................. 30

9. LIGHTING AND DRIVER ASSISTANCE AT PSA ............................................................................... 31

Suppliers of PSA ................................................................................................................................ 31

10. LIGHTING AND DRIVER ASSISTANCE AT PEUGEOT ................................................................... 32

Products ............................................................................................................................................ 33

Style ................................................................................................................................................... 33

Performances/Technology ................................................................................................................ 34

Peugeot cars in production and lighting suppliers ........................................................................... 36

Concept cars gather feedback and guidance from customers ......................................................... 37

11 LIGHTING AND DRIVER ASSISTANCE AT CITROËN ...................................................................... 39

Products ............................................................................................................................................ 40

Style ................................................................................................................................................... 40

Performances/Technologies ............................................................................................................. 41

Citroën cars in production and lighting suppliers ............................................................................. 43

Concept cars ...................................................................................................................................... 44

The "Conservatoire" .......................................................................................................................... 48

INTERVIEWS .................................................................................................................................. 50

Jean‐Philippe Collin ........................................................................................................................... 51

Jean‐Christophe Quemard ................................................................................................................ 53

Jean‐Paul Ploué ................................................................................................................................. 55

Jerome Gallix ..................................................................................................................................... 58

Gilles Boussac .................................................................................................................................... 60

Executiv

e summAry

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EXECUTIVE SUMMARY

The author first presents the History of PSA, its Headquarters, Strategy, Finances, Engineering/Innovation, Production and Quality.

Then he describes what will become PSA key strategic suppliers policy: PSA will select about 15 key strategic suppliers by the middle of 2008 as they strive to lower costs, improve quality, and streamline development processes. PSA need help from their suppliers to meet the goals of cutting purchasing costs by 6% a year, achieving high quality, boosting innovation, and cutting development times.

The selected strategic suppliers will have to be able to follow PSA around the world as the group’s sales increase in China, Argentina, and Russia. More parts will have to be purchased from low‐cost countries, to achieve the PSA goal of cutting costs by 6% a year.

Style is one of the important differentiating features between Peugeot and Citroen but styling innovations of the car models of these two brands will be used to compete against other car makers.

Concerning more specifically Lighting and Driver assistance at Peugeot and Citroen the author describes how Peugeot and Citroën style Directors are increasing perceived brand values through enhanced Lighting performance and Driver assistance technologies.

Exclusive interviews from J. Ph. Collin, G.Boussac, J.C.Queymard, J.P.Ploué and J.Gallix close this PSA company profile.

Abo

ut th

e author

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ABOUT THE AUTHOR

Hector Fratty's entire career has been in automotive lighting. From 1995 to 2006, he acted Valeo Lighting Systems' chief of R&D, managing a staff of 650 engineers and technicians and a budget of over €70m. He filed 20 patents worldwide. His level of expertise in lighting gained him recognition as one of Valeo's 5 Master Experts, and he headed the Valeo Lighting Expert Committee until end of March 2008.

He now manages the automotive lighting consultancy Fratty Consulting, and has initiated the launch of a new company, DrivingVisionNews, a news pipeline dedicated to keeping the lighting and driver assistance community informed of the latest progress and development in the industry.

Hector Fratty presides over the highly‐regarded biennial VISION Congress international automotive lighting and driver assistance symposium. The next VISION Congress will be held on the 7th and 8th of October, 2008 in France; 250 experts from around the world will attend the congress, and 20 technology demonstration vehicles will be presented.

Hector Fratty is also a member of the ISAL steering committee, which guides and administers the ISAL international symposium on automotive lighting organized by Technische Universität Darmstadt in Germany.

Special thanks to Daniel Stern and Salomon Berner for their help to the author.

Daniel Stern, based in Toronto, is one of the 5 greatest lighting experts of America. He is an appointed member of the US transportation Research Board Visibility Committee, which steers North America research on matters related to automotive conspicuity, lighting performance and regulation. He attends and participates in the world’s automotive symposia, and has attended the international GRE automotive lighting meetings at the invitation of Transport Canada’s regular of automotive lighting

Salomon Berner is a senior Management Consultant and Coach based in Paris. He first graduated as polytechnical and aeronautical engineer, and then successfully took over managing responsibilities in small and medium sized industrial and service companies in France and abroad. His business experience was very helpful in setting up DrivingVisionNews business model and first website.

Introd

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INTRODUCTION

PSA is one of the auto industry’s longest‐established companies, and comprises the 2 oldest worldwide OEM companies, Peugeot and Citroën, each in existence for over a century. The 2 companies are both generalists offering similar model ranges incorporating a great many common components.

PSA’s success is due to exceptionally good intracompany communication, a well‐rooted history, and a well‐delineated difference in style and brand identity; Peugeot brand has an image of robustness and style, while Citroën brand has an image of innovation and technology.

Until 2002, PSA has been the European most profitable automaker. After 4 years of stagnation, the good results are arriving in 2007 with a big ambition for the next years defined by Christian Streiff, the chairman. PSA competes with the 5 US/Europe generalists, GM, Ford, Renault, VW, Fiat and the 3 big Japanese, Toyota, Nissan, Honda. In 2007, the global market share of PSA is 5.2%. In Europe, PSA is the second player with a market share of 13.8% after VW with 18.7%.

1. H

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1. HISTORY

PSA

PSA history started in 1974 when Peugeot took over Citroën.

‐ Three different trade marks were produced at this time: Peugeot, Citroën and Talbot (included the European subsidiary of Chrysler). There were some synergies between them like the Peugeot 104, Citroën LN and Talbot Samba models but Talbot is finally sacrificed and disappears in 1986. Peugeot with the 205 model and Citroen with BX, permitted good results at that time. ‐ PSA also entered into several industrial cooperation agreement with Renault (mechanics) and Fiat (common factories in France and Italy to assemble three ranges of cars), then with Ford (Diesel motor), Toyota (development and production of three mini cars), BMW (motors) and Mitsubishi (4x4). 1997 marks the start of a major industrial reorganization. Platform policy with three platforms and industrial tools shared by Peugeot and Citroen In 1998, Ecia took over Bertrand Faure, a components manufacturer and renamed it Faurecia, in which PSA has more than 50% stake.

From 1997 to 2007, have been some important milestones.

‐ Until 2002, PSA has been the European most profitable automaker with sales fast growing year after year.

1998/million 1999/million 2000/million 2001/million 2002/million

2.282 2.518 2.815 3.132 3.267

‐ From 2003 to 2006, 4 years of stagnation of sales and strong decrease of profit ‐ In 2007, C.Streiff arrived as the new head of PSA, and a new corporate ambition defined in Cap 2010 and Ambition 2015. ‐ 2007 was the first year of growth since 2003 for PSA.

2002/million 2003:million 2004/million 2005/million 2006/million 2007/million

3.267 3.286 3.375 3.390 3.365 3.428

PSA has a stable Management, with only 5 Chairmen since 1962.

1962‐1977 F.Gautier 1977‐1983 J.P.Parayre 1983‐1997 J.Calvet 1997‐2007 J.M.Folz Feb. 2007 C.Streiff

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Peugeot

Peugeot is a major French carmaker which is today part of the PSA Peugeot Citroën Group. Peugeot first entered the world of wheeled vehicles with bicycles. 1896 saw the first Peugeot engines, which were soon placed under a hood (bonnet) at the front of the car, instead of hidden underneath — then it was only for the steering wheel to be adopted, and cars began to take on their modern form. Peugeot turned largely to weapons production during 1914‐18, becoming a major manufacturer of weapons and military vehicles from bicycles to tanks and shells. ‐ 1929 saw the introduction of the Peugeot 201, the first car to be numbered the Peugeot way: three digits with a central zero, an enduring registered Peugeot trademark. It was also the first mass‐produced car with independent front suspension. Soon after, the Depression hit; Peugeot sales dived, but the company survived. 1948 saw the company restarting in the car business, with the Peugeot 203. In 1948, the company reentered the car business with the Peugeot 203. More models followed, many elegantly styled by Pininfarina. The company began selling cars in the United States in 1958. Like many European manufacturers, collaboration with other firms increased; Peugeot worked with Renault from 1966 and with Volvo Cars from 1972. .

201, 203 and 403 Peugeot cars

201

203 403

Launches of main Peugeot vehicles

1929 1948 19xx 1972 1977 1983 1989 1993 1995 1999 2001 2005 2006 2007

201 203 403 104 305 205 605 306 406 206 307 407 207 308

The Big 1974 change.

In 1974, Peugeot bought a 30% share of Citroën, and took it over completely in 1976. The joint parent company became the PSA group, keeping the separate identities of both brands but sharing part of engineering and technical resources. 1983 saw the launch of the popular and successful Peugeot 205, which is largely credited for paving the upward path of PSA’s fortunes. Many other successful vehicles have followed.

1. H

istory

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19902002 famous years, cresting a peak.

Peugeot, under the leadership of Frederic Saint Geours since 1990, had good success with the 206 and 307. The high growth of sales stopped by 2002, due largely to electronic quality problems and strategic issues. Strong market share in Europe is decreasing since 2002

Market share in Europe decreased from 8.9% in 2002 to 7.9% in 2004 and 7.1% in 2006

Vehicles produced

2002/million 2003/million 2004/million 2005/million 2006/million 2007/million

1.955 1.913 2.027 1.995 1.959 1.967

2008: new leadership.

In January 2008, Jean‐Philippe Collin took leadership of Peugeot

1. H

istory

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Citroën

The story of Citroën begins in 1919 with the founder of the company himself, André Citroën who started to produce automobiles, beginning with the conventional Type A. Citroën was the name of an exceptional man. Trained at the “Ecole Polytechnique”, an elite engineering school, André Citroën was a brilliant technician. But he was also an adventurer and an inventor of modern style. The stamp of his personality remains integral to the identity of the company.

Citroën stunned the world in 1934 with the innovative Traction Avant, Front Wheel Drive (1934‐1956) just before Michelin took control of the company in 1935‐ Following cars were extremely innovative, the 2CV (1948‐1990), DS (1955‐1975) and CX (1974‐1989).

2CV, DS and CX cars

2CV

DS CX

Launches of main Citroën vehicles

1948 1955 1970 1972 1974 1982 1989 1996 2000 2002 2003 2005 2006 2008

2CV DS SM GS CX BX XM Saxo C5 C3 C2 C4 C6 C5

Citroën develops the directional high beam.

In 1955, Citroën released the DS model, which featured the first full implementation of Citroën’s now legendary hydro‐pneumatic suspension system. The DS featured power steering, power brakes and power suspension. The high‐pressure hydraulic system would form the basis of many Citroën cars in the second half of the 20th century, including the SM, GS, CX, BX, XM and Xantia models. What Lighting people retain about the DS is the directional headlamps. With the help of Cibié, Citroën developed a cable‐operated directional high beam system. The high beams turned with the wheels in response to the driver’s steering wheel input.

1. H

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Citroën also sponsored expeditions in Asia (Croisière Jaune) and Africa (Croisière Noire), intended to demonstrate the potential for motor vehicles to cross inhospitable regions. These excursions included scientists and journalists and turned into a big P.R. success. In 1967, Citroën took control of Italian sports carmaker Maserati and launched the SM, which contained a Maserati V6 engine. In all worldwide markets except the USA, the SM featured a state‐of‐the‐art directional head lighting system from Cibié, but the car suffered from unfortunate timing with the impending 1973 energy crisis soon to make GT manufacturing unprofitable. In 1974, the CX was released, so named because its shape permitted the best aerodynamic coefficient, Cx yet attained in a production passenger car. Huge losses caused by failure of the Maserati tie‐up coupled with crippling warranty costs incurred by the unreliable GS and CX led to Peugeot taking over Citroën in 1976. The combined company was known as PSA Peugeot Citroën. In the 1980s, Citroën models were increasingly Peugeotbased

In the 1980s, Citroën models were increasingly Peugeot‐based. The BX of 1982 still used the hydro‐pneumatic suspension system, but was powered by Peugeot‐derived engines. By the late 1980s, PSA used extensive platform sharing. The XM launched in 1989, for example, used the same engines and floor pan as the Peugeot 605 launched in 1990, and the Xantia of 1993 was identical under the skin to the Peugeot 406.

Since the 2000s, production slow growing year after year

After the Xsara Picasso was launched in 1999, Citroên adopted a new model nomenclature consisting of the letter “C” followed by a number indicating the model’s placement within the range. First the C5 was released in 2000, then the C3 and C8 in 2002, the C2 in 2003 and the premium executive C6 model in 2006. Citroën has continued its tradition for innovation, exemplified by new vehicles such as the C2 and the Xsara Picasso. It has even expanded into new markets, for example in China where the C‐Triomph and Xsara Picasso are sold alongside the local Elysée and ZX Fukang models. The introduction of even newer models, such as the C4 and the C5 and also the long‐awaited XM replacement, the C6, indicates Citroën’s continued commitment to innovation in the 21st century.

Citroën vehicle production

2002/million 2003/million 2004/million 2005/million 2006/million 2007/million

1.312 1.372 1.348 1.394 1.406 1.461

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2. HEADQUARTERS

PSA is owned by Peugeot family (30%)

PSA companies

PSA comprises several subsidiaries:

• Faurecia, which manufactures seats, front end modules, exhaust systems, and other components. Faurecia is the European leader and number two worldwide in most of its businesses activities

• Gefco, which furnishes transportation and logistics services

• Banque PSA Finance, which federates the group’s finance companies

• Peugeot Motorcycles. the third‐largest European manufacturer of scooters and motorcycles in the 50 to 125 cc range

• Peugeot Citroën Moteurs (PCM), which sells engine and gearboxes to customers outside the PSA group

• Process conception Ingénierie (PCI), which designs and builds industrial equipment for the Group and other global carmakers

Managing Board Christian Streiff, Chairman

Jean‐Philippe Collin, Executive Vice‐president Peugeot Born 1956 Ecole superieure d’electricité IBM Valeo, purchase director Thomson, purchase director Executive Vice‐president Peugeot since January 2008

Gilles Michel, Executive Vice‐President Citroën Born 1956 Ecole Polytechnique Saint Gobain PSA platform director Executive Vice‐president since February 2007

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Gregoire Olivier, Programs Born 1960 Ecole Polytechnique MBA Chicago university Adviser in Industry ministery Sagem CEO then Faurecia CEO In charge of product design, style, Quality, invests, common platforms management

Roland Vardanaga, Technical and Manufacturing, Projects and Production Born 1943 Ecole nationale Superieure des Arts et metiers PSA platforms PSA Programs director (directeur technique et industriel PSA) In charge of engineering and production in order to decrease costs and to increase quality

Executive Committee

Christian Streiff, Chairman

Jean‐Philippe Collin, Executive Vice‐president Peugeot

Gilles Michel, Executive Vice‐President Citroën

Gregoire Olivier, Programs

Roland Vardanaga, Technical and Manufacturing, Projects and Production

Isabel Marey‐Semper, Finance, in charge of strategy Born 1967 Ecole Normale Supérieure Saint Gobain then Thomson In charge of preparing the development of PSA, to prospect the market, R&D and Technology

Jean‐Luc Vergne, Human Resources

Jean‐Claude Hanus, Legal Affairs

Lilliane Lacourt, Corporate Communication

Frederic Saint Geours

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Extended Executive Committee

China, Denis Duchesne Brazil and Argentina, Vincent Rambaud Research and Automotive innovation, Pascal Henault Purchasing, Jean‐Christophe Quemard Spare parts, Daniel Marteau Informatics and Top managers, Alain Sartoris

3. Strategy

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3. STRATEGY

PSA strategy is built around 2 concepts: urgency and ambition.

Program: “Cap 2010”

Cap 2010 defines two primary urgency objectives to be achieved by 2010: to improve sales to 4 million vehicles, and to increase operating margin to 6%. These goals are to be achieved within a framework of four priorities: quality, costs, products, and international operation as follows:

Quality, PSA will improve works on design and production and will stress suppliers PSA will increase efforts in design and production and will hold suppliers to higher standards of quality. PSA, like Renault, has a public image with regards to vehicle quality, because of its past history. The challenge is to reduce the number of quality incidents by half and to shorten incident resolution times by two‐thirds. In terms of quality service, the goal is for Peugeot and Citroën to rank among the European Top 3. For that purpose, PSA have to accelerate works on design, on industrialization and on common work with suppliers. Costs, PSA will cut costs in 8 directions PSA will implement a cost‐reduction program with 8 actions to improve productivity by 5% per year:

• Reduce warranty costs by half, • Increase purchasing productivity from 4% to 6% a year, • Reduce overhead and fixed costs by 30%, • Shorten development cycles from 5 years to 4 years, • Reduce supply chain costs by 10%, • Fully roll out the industrial efficiency “Convergence” program and increase capacity utilization by 20 points • Cut workforces by 8,000 in Western Europe with only voluntary leaves (already achieved by end 2007) • Simplify the organization, In addition, ongoing cooperation will continue with Fiat, Mitsubishi, BMW, Renault and Toyota.

Products, PSA will launch 53 new models and reduce development time Worldwide new models will be launched in 4 years, from 2007 to 2010 Development time reduced from 5 years to 4 years, with a long term target of 144 weeks. A further objective is to maintain the average of the line‐up at 3 years compared with 4.5 years in 2006 The decision has been made not to develop an extremely cheap car at this time.

3. Strategy

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International, priority to South America, China and Russia. Priority is to be placed on South America, China and Russia. PSA will produce 4 million cars in 2010, up from 3.36m in 2006 and 3.42m in 2007, by increasing production outside France. Germany is the testing ground for the group’s bid to regain market share in Europe. The target is to increase from 3% in 2007 to 5% by 2010.

Brazil and Argentina are the group’s South American action centres. Goals include a doubling of sales to 400,000 vehicles with 12 new models, an entry‐level segment, additional capacity, and extension of dealer and R&D networks in the region.

The Group’s ambition for China is to become an established, profitable industry player by 2015, with sales increasing to one million units. PSA plan to start up new manufacturing facilities with its partner Dongfeng Motor by 2010, to renew the Peugeot and Citroën ranges by launching 12 new models, to develop R&D and styling centres, and to strengthen purchasing in the region.

Russia is PSA’s primary lever of Eastern Europe. The group has set an objective of 100,000 vehicles in 2010, and to increase sales rapidly to 300,000 units. Kalouga is the site of a new production facility to be operational by 2010, producing midrange cars like the Peugeot 308 and Citroën C4.

There are no current plans for a return to the North American market.

Some other organization decisions:

‐ Creation of a Programs department, the director of which will seat in the managing Board. ‐ Creation of an Operation department with engineering, production, logistics, director part of the managing Board. ‐ Creation of 3 business units, China, Mercosur and Aftermarket which report to the President. ‐ Purchase department reports directly to the President.

Ambition 2015

Ambition 2015 defines corporate strategy through 2015.

Under the plan, PSA will have been turned back into the most competitive carmaker in Europe by 2015 with an operating margin of 6 to 7% (and 5.5‐6% in 2010), reversing a four‐year decline in margin.

In 2015, PSA Peugeot Citroën intends to be solidly positioned in Europe, steadily growing and profitable, with extensive operations in other global markets and ranking among the leaders in each of its businesses.

4. Finances

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4. FINANCES

People

2008 data

Total people: 207,900 including 113,000 in France

Car makers: 134,300

Faurecia: 59,700

Sales

2003 to 2006, 4 years of declining margin with flat sales.

Not long ago, PSA was Europe’s most profitable automaker

But since 2002, sales were flat. Main reason was that PSA has lacked global scale, has had quality issues and is heavily dependent of Western Europe, the most closely‐fought automotive battleground in the world.

2007 Growth coming back. Sales and Production

Sales B€

Cars/million included CKD

2001 51.6 3.132 2002 54.4 3.267 2003 54.2 3.286 2004 56.1 3.375 2005 56.3 3.390 2006 56.5 3.365 2007 60.6 3.428

Total sales up 1.8% in 2007.

Vehicle sales up 1.8% in 2007 to 3.43 million.

Sales increased in Europe by 1.2% for the first time since 2002.

Sales by brand: Peugeot boosted with 207, Citroën with MPV.

4. Finances

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Peugeot: Sales of the Peugeot 207, which was introduced in France in April 2006, totaled 521,000 units, exceeding the target of 500,000 units for the model's first full year on the market. The international popularity of the 206 continued to increase in 2007, with 309,000 units sold worldwide. Global combined worldwide sales of the 206 and 207 increased 7.1% to 830,000.

Citroën: The highlight of 2007 was the success of the C4 Picasso; over 200,000 units sold during the year.

The Xsara Picasso, of which 120,000 units were sold, was the prime mover behind a meteoric 55% rise in Citroen’s compact minivan sales.

The Citroen Berlingo and the Peugeot Partner, launched over a decade ago, set volume records in 2007 with total sales of 348,000.

Sales by region: flat in West Europe, growth outside

In a Western European car and light commercial vehicle market up by a slight 0.7% in 2007 vs. 2006, registrations of PSA group’s vehicles increased for the first time since 2002, by 0.9% to over 2.33m units (1.22m units for Peugeot and over 1.11 units for Citroën).

After several years of decreasing market share, the group held steady at 13.8% —7.3% for Peugeot and 6.6% for Citroën — in the midst of a challenging business environment.

2007 Market share in Europe

VAG PSA Ford GM Renault Fiat Toyota

18.4% 13.8% 11.2% 9.8% 8.9% 8.8% 5.8%

In France, where PSA are the leading maker, combined Peugeot and Citroën car and light commercial vehicle registrations rose by 1.9% to garner 30.9% of a market up 3.5% with 779,800 units sold. However, German registrations of new PSA vehicles declined by 10.6%.

Outside Western Europe: vehicles sales up 11.1% Outside Western Europe, Group sales of vehicles and CKD units exceeded one million units for the third consecutive year. These markets represented 32.2% of worldwide sales for the year, versus 31.8% in 2006 and 30.4% in 2005.

Sales of vehicles outside Western Europe rose by 11.1% in 2007, spurred by faster expansion in PSA's priority regions.

In Eastern Europe, where PSA Peugeot Citroën is the second largest manufacturer, sales rose 15.5% to 132,000 units, outperforming the market.

In Russia, a new priority growth region for the Group, PSA Peugeot Citroën registrations rose by a third to 36,000 units in a fast growing market (+35%).

4. Finances

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In the Chinese market, up by a strong 24.5% and following a strong sales growth (+63%) in 2006, Dongfeng Peugeot Citroën Automobile (DPCA) sold 209,000 vehicles in 2007. This amounted to an increase of 3.1% for a DPCA market share of 4%..

In the Mercosur region (Brazil and Argentina), PSA Peugeot Citroën registrations rose 32.5% to 208,000 units, outperforming a very hot car market.

In Brazil, registrations rose 33% to 129,000 units, for a 5.5% market share, while in Argentina, unit sales expanded 31% and market share improved by 0.5 pts to 15%.

20 new vehicles will be launched in 2008.

‐ Citroen C5 and Peugeot 308 SW.

‐ Bipper and Nouveau Partner for Peugeot brand.

‐ Nemo and Berlingo for Citroen brand.

‐ 5 launches in China.

‐ 5 launches in South America.

Results

2003 to 2006, 4 years of declining margin. No long ago, PSA was Europe’s most profitable automaker. But since 2002, sales was flat and operating margin decreasing a lot

2007 results, growth coming back.

Sales Group b€ /Automotive

Operating Income M€

Operating income %

R&D billion € for Automotive

2000 44.2 2.1 4.8 1.46

2001 51.5 2.6 5.1 1.85

2002 54.4 2.93 5.4 2.02

2003 54.2 2.21 4.1 2.10

2004 56.1 2.48 4.4 1.80

2005 56.3 1.94 3.4 1.89

2006 56.5 1.12 2 1.85

2007 60.6/47.4 1.75 2.9 1.80 (3.9%)

4. Finances

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2007 results show a big rise profit, in line with 2010 targets. Operating Margin rose to 2.9% from 2% in 2006. More significant is the 3.1% in second half vs 2.7% in first half. Operating Income was 1.75b€ from 1.12b€ in 2006. Net income was 885m€ from 183m€ in 2006.

Profit improvement was mainly due to cost reduction. Gain of 930m€ in 2007 on cost reduction. ‐ Reduction of overhead cost: People in West Europe decrease more than 10 000 people, included 8 000p in France (4000 voluntaries). ‐ Reduction of warranty expenses, ‐20%. ‐ Manufacturing and Purchasing costs.

2008 Sales As a result, the Group expects to sell around 3,550,000 to 3,650,000 units of assembled vehicles and CKD units in 2008, representing an increase of around 5%. This growth should be stronger in the second half of the year than in the first six months, as a result of the scheduled launches of new vehicles. This objective is in line with the CAP 2010 action plan, 4 million cars and Operating margin at 6%

Q1 worldwide sales are up 6.1% at 876,400 units and Group turn over is up 2.3% at 15.212b€ Q2 will see a significant number of market launches, with the Peugeot 308 SW, the new Citroën C5 and C5 Tourer, the new Peugeot Partner and Citroën Berlingo, the restyled Citroën C3 in Mercosur and the Citroën C‐Elysée in China. As a consequence, end of April, the Group reaffirms its 2008 worldwide sales target of a volume growth around 5%.

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5. ENGINEERING AND INNOVATION

Budget

The budget is stable at 2b€ which represent 4.5% of the Automobile revenue.

18,000 engineers and technicians participate in the programs and in Innovation.

Development

PSA is the first French company for patent filling. 30 engineers and technicians are working in patent department Patents are focused in 3 areas: Environment, Comfort and Safety included Driver Assistance An annual award thanks the best inventions

Pascal Henaut is at the head of Innovation department.

70 innovative projects developed.

PSA Peugeot Citroën's R&D is organized through a Research and Innovation Plan that currently encompasses more than 70 projects concerning all automobile development areas, including architecture, ergonomics and manufacturing processes. Each project is designed to provide the essential input for developing key technologies used in vehicles and their production facilities. 821 patents were deposited in 2006. Innovation plans are signed with companies like Bosch, Delphi, Valeo, or Magnet Marelli

EuroNCap

Important part focused to security: 11 cars with 5 stars on crash test Euro NCap, included last cars, 207 and 308 and C6 best rate for pedestrian protection.

3 levels of security:

‐ Safety and collision prevention,

‐ Inside protection

‐ Assistance after an accident

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5. Engineering

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3 R&D centers and ADN

To improve innovation and decrease costs, PSA built 3 platforms for the Peugeot and Citroen models. All the projects are developed in 3 R&D centres and an Advanced Centre

Velizy

Innovation and development of new cars (platforms 1 and 3).

Velizy A + Velizy 2 + ADN (innovation & Design) = 6600 p.

6600 people are working at Velizy.

Sochaux

Development of new cars (platform 2).

La Garennes Colombes

Development of powertrain, 3000 p.

Carrieres sous Poissy

Development of new projects with other carmakers, 500 p.

ADN (Automotive Design Network) was inaugurated at Vélizy in 2004. It comprises styling and innovation teams and covers 70,000 square meters. The ADN boasts a Virtual Reality Centre equipped with state‐of‐the‐art advanced digital simulation facilities.

2 test centres

Belchamp

The test centre at Belchamp includes 430 hectares of diverse roads, laboratories and test benches. 1300 people are working in this centre.

La FertéVidame

New cars are tested on 800 hectares of diverse roads.

10million km are driven per year at the site.

200 people are working in this centre.

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PSA Strategy/Performances and Design

The first priority of PSA is outstanding and specific style for the two brands

PSA gives priority to style.

Lighting performances have to be at the level expected for its segment but not necessary the best in class.

PSA has since 2004, a high tech facility for style and innovations.

In Velizy, close to Paris, PSA opened a centre of design and innovation named ADN (Automotive Design Network). All the design and innovation teams are gathered in this 70 000 m2 centre over three floors with 1000 people and more than 20 different nationalities. While gathered under the same roof, the Peugeot and Citroën styling teams work in different areas, a solution that promotes healthy competition by allowing for contact yet avoiding indiscriminate mixing of their distinctive styles.

R&D and Style teams work together.

The innovation and vehicle architecture teams work on vast platforms in close proximity to styling teams. ADN is equipped with resources for research and design (innovation project teams) and for creation (styling studios), as well as for producing prototypes (milling machines, paint and assembly workshops, etc.).

ADN includes spaces that ensure confidentiality, areas to meet with suppliers, terraces so that vehicles can be exposed to sunlight, and an auditorium. The facilities also offer styling teams carefully studying lighting possibilities to meet their varying needs, from direct, overhead daylight to artificial light. ADN also has a 500‐square‐meter Virtual Reality Center, equipped with the auto industry’s most advanced digital simulation tools.

This 130million€, world‐class facility will enable PSA Peugeot Citroën to improve its automotive design capabilities while consolidating resources and managing costs more efficiently.

Virtual reality centre ADN centre

25


There is a strong competition between Style teams

For each project, two different internal studios are in competition inside ADN. Both leaders of the two studios report to the style director, J.Gallix or Ploué who push competition with consideration of style strategy. It is a big change with the past when one PSA team was in competition with one external studio.

Style to boost sales in China

In 2007, PSA opened a style studio in China with 15 designers in order to conquer Chinese market. Peugeot and Citroën have to adapt style to Chinese expectations.

Mass reduction, a priority for PSA

The battle for increased vehicle fuel efficiency may be about to shift from the power train to reducing vehicle mass.

PSA announced plans to cut weight in its future models using a variety of techniques including designing in plastic fenders rather than steel. The widespread move to global vehicle architectures would appear to offer more opportunity to reduce mass across entire product families.

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6. PRODUCTION

PSA are Europe’s second‐largest European carmaker (after VW). The group has a worldwide market share of 5.2% with 3.42m vehicles produced in 2007 (1.97 million for Peugeot and 1.46million for Citroën).

PSA has 15 production sites worldwide

France Aulnay (300,000), Poissy (290,000), Rennes (200,000), Sochaux (330,000), Mulhouse (300,000), SevelNord Valenciennes (110,000).

West Europe Vigo (540,000) and Madrid (150, 000) in Spain, Mangualde (60,000) in Portugal, Sevel (110,000) in Italy.

East Europe Kolin (200,000) in Czech Republic, 190,000cars)), Trnava (180,000) in Slovakia.

South America Brazil: Porto Real (110,000) in Brazil and Palomar (120,000) in Argentina.

China Wuhan (210,000).

Wuhan plant in China, Hubei

PSA has 10 CKD assembly sites

In addition, CKD units are assembled under license at ten assembly sites worldwide. Bangkok (Thailand), Bursa (Turkey), Casablanca (Morocco), Jakarta (Indonesia), Kaduna (Nigeria), Le Caire (Egypt), Los Andes (Chile), Mombassa (Kenya), Mutare (Zimbabwe) and Téhéran (Iran).

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PSA has a policy of alliance with main partners

Fiat. Partnership with Fiat started in 1978. JV known as Sevel for development and production was built with two production plants in France close to Valenciennes and in Italy at Val di Sangro. Some common developments are also done in transmission.

Renault. Some common development on engines and transmissions since 1992.

Ford. Partnership started in 1998. PSA supplies Diesel engines as used in the Ford Fiesta , Ford Focus and Volvo S40.

Toyota. Common agreement for the development and manufacture of city cars (107, C1 and Aygo) in Czech Republic started in 2001.

BMW. Technical alliance about engines started in 2002.

Mitsubishi. Alliance was concluded in 2005. PSA will import the Citroen C‐Crosser and the Peugeot 4007 for sale in Europe.

PSA gives the priority to production in China, Russia and South America

China: PSA invests in new specific models and in production capacity China’s rapidly expanding consumer market and infrastructure makes the region an obvious area for growth. PSA, in conjunction with DPCA (a JV with Dongfeng and a factory in Wuhan) was an early entrant, but has tended to underperform the rapidly growing Chinese market. DPCA is now ranked number 10 in China with 200,000 cars yearly. The vehicles produced are the Citroën Fukang, Xsara Picasso and Elysée and Peugeot 307 and, since 2006, the Citroën C‐triumph based on the C4 and a supermini based on the Peugeot 206 called the C2.

PSA plans to put investment in 12 models by 2010 and in capacity:

. Wuhan factory capacity from 200 000 to 400 000 vehicles.,

. A second factory of 150 000 vehicles in 2009 for high level cars

. 3rd factory expected in east cost. Decision to be taken Q1‐ 2008

. 4th factory for minibus and van from a JV with Harbin Hafei Motor and an investment of 200M€ (to be confirmed).

More than 15% of worldwide PSA purchase will be from China by 2010.

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Russia: PSA targets 300,000 cars in Long Term Sales in 2007 will be around 35 000 units.

PSA Peugeot Citroën has set an objective of 100,000 vehicles in 2010, and to increase sales rapidly to 300,000 units. PSA choose the site of Kalouga which will be operational by 2010. Medium cars, Peugeot 308 and Citroën C4 will be produced there.

South America: PSA targets to sell 500,000 cars in 2010 PSA plan to double sale volume to 500 000 vehicles in 2010 by:

° Introducing 12 new models including an entry‐level vehicle.

° Adding more production capacity.

° Extending the 2 brand dealer networks.

° Increasing local R&D in the region.

The investment expected to reach these goals are around 1b$, of which of 500m$ to reach capacity by 2009, 150m$ to increase capacity and 350m$ to develop the dozen new models

Main vehicles produced in 2 007

Peugeot Volume x000

2007

107 105

206207 835

307308 457

407 129

Partner 161

Total 1967

Citroën Volume x000

2007

C1 99

C2 93

C3 273

C4 452

Berlingo 182

Total 1461

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7. QUALITY, CUSTOMER SATISFACTION

PSA has a relatively poor public image of Quality

In the Satisfaction survey led by JDPower, PSA has a relatively poor rate

In JD Power & Associates’ Satisfaction survey, PSA vehicles do not top the charts. Toyota’s Prius and Honda’s Accord have the best ranking of 85.5, and all those makers’ other models are close to that ranking. PSA’s models are far behind, with the group’s highest‐ranking model being the Peugeot 607 (81.8).

Assessment of the best and the worst PSA vehicles

The best PSA vehicles

607 81.8

C5 81.6

406 81.1

C4 80.5

407 79.9

PSA has a strong ambition to improve Quality

However, PSA have a strong ambition to improve quality. The goal is to halve the number of incidents in the year after a new model is launched, and to react to such incidents three times faster. PSA have learnt a lot about quality from its partnership with Toyota in the production of the C1, 107, and Aygo. This experience was extended to Rennes in the production of the 407, followed by that of the C5.

The worst PSA vehicles

107 77.2

807 75.5

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8. PSA CYCLE PRODUCTION PLAN

Peugeot cars

Trade name Code name SOP 1 SOP 2

107 B0 2005 2014

207/208 A7/A9 2006 2012

307/308 T5/T7 2007 2013

407/408 D2/W2 2005 2010

607/608 Z9/W31 1999 2009

807/808 V2/H8 2002 2011

1007 A08 2003 2009

Expert G9 2008

Citroën cars

Trade name Code name SOP 1 SOP 2

C1 B0 2005 2014

C2 A6 2009 2013

C3 A8 2002 2009

C4 B5/B7 2005 2011

C4 Picasso B58 2006 2011

C5 X4 2008 2014

C6 X6 2005 2012

C8 V3 2002 2012

Berlingo B8/M49 2008

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9. LIGHTING AND DRIVER ASSISTANCE AT PSA

Suppliers of PSA

In Lighting, 5 suppliers share PSA needs.

Valeo, A.L., Hella, Visteon, and Koito since 2008.

In Driver Assistance, 5 suppliers share PSA needs.

Valeo, Bosch, Hella, TRW, Delphi.

JeanChristophe Quemard is the new boss for Purchasing.

He was appointed Vice president Purchasing since January 2008.

He is a member of Extended Executive Committee.

Born 1960 Ecole des mines de Saint Etienne and Ecole du Pétrole et des Moteurs, option économie‐gestion Peugeot, Sochaux then Poissy, production, methods and Quality PSA industrial equipment PSA platforms 308 project director

J.C.Quemard has high expectations for suppliers.

° PSA will select about 15 key strategic suppliers by the middle of 2008 as they strive to lower costs, improve quality, and streamline development processes. PSA need help from their suppliers to meet the goals of cutting purchasing costs by 6% a year, achieving high quality, boosting innovation, and cutting development times.

The selected strategic suppliers will have to be able to follow PSA around the world as the group’s sales increase in China, Argentina, and Russia. More parts will have to be purchased from low‐cost countries, to achieve the PSA goal of cutting costs by 5% a year .

° Quemard said “I have a good understanding of the suppliers constraints, but also of what we can ask to them. And we can ask much more”.

° Globally, every year, PSA buy 30b€ in parts from about 500 suppliers. The group are trying to reduce the overall number of suppliers, some of whom furnish very few parts.

° PSA doesn’t object to private‐equity funds becoming key share‐holders in automotive suppliers. Some of them have a very positive role by challenging management’s strategic vision. They can map out very good business plans.

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10. LIGHTING AND DRIVER ASSISTANCE AT PEUGEOT

After 10 years as a follower, Peugeot is becoming a leader in some technologies

• Until 1990, Peugeot were the worldwide leader in lighting performances, thanks to their vehicles’ largest‐in‐class headlamps and close cooperation with leading French lighting suppliers.

The 204, 304, 505 were always the benchmark of lighting performance .

• Beginning in 1990, Peugeot used complex shape reflector technology and maintained their lighting lead with the 605, selected as the vehicle with the best lighting by several magazines like Auto+.

• But after 1995, Peugeot leadership was eroded by the company’s refusal to fit projector and Xenon technologies in spite of the competition’s enthusiastic adoption of these new lighting systems .

• Since 2006, Peugeot has worked at regaining their lighting leadership, and also has been striving to attain leadership in driver assistance by adopting high‐technology systems in the sector.

JeanPhilippe Collin is the new boss of Peugeot Jean‐Philippe Collin is the new executive Vice‐president of Peugeot.

He heads Peugeot since January 2008 and replaces F.Saint‐Geours who had run of 17 years at the helm.

Collin has skills as a businessman and a leader. He joined PSA in 2004 with a mission of “cost killer”.

His 2 main targets are now: to boost sales without decreasing margins, to improve the communication and Quality of sales and After market.

Gilles Boussac is the new Product director Gilles worked in Rennes like body frame plan manager director then was DPCA Vice‐President in China, in charge of technical and purchasing development.

Gilles now works for Peugeot but he reports to G.Olivier in charge of PSA Products and Programs in order to move faster with fewer decision stages.


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Products

The new 308 embodies the Peugeot image

The particularly feline looking front headlights extend harmoniously along the bonnet profile. Four “circular lights” with an attractive technical finish give the vehicle a “look” that is both bright and eye catching, and are clearly visible through the clear headlamp lenses. The shape of the fog lamps is reminiscent of those of the 907. Positioned at each end of the lower front bumper panel, they make the vehicle visually appear much wider and give the impression that the 308 is “glued to the road”. The lines at the rear of the vehicle help to identify it. The large wrap around lower bumper – which on top‐of‐the‐range models combines with a rear diffuser – and large rear lights emphasizes the wider rear profile and the large curved rear tailgate glass.

Style

The new director Jerome Gallix researches Harmony in Peugeot’s design.

Peugeot have to keep abreast of ever‐faster changes in public tastes and trends in more markets than ever before, from France to China and South America. Elegance and Robustness are the new priorities of Peugeot — no more sports cars! Models have to have a cat‐like gaze, a feline look. The customer has to trust Peugeot. The references are the 403, the 406 Coupé, and the Passat.

J.Gallix, 43, is Peugeot’s new style director. He replaces Gerard Walter, 64. Gallix joined Peugeot’s design department in 2003, and says he will introduce more harmony in Peugeot’s design, though he says headlights will remain largely untouched.

The specific design of Peugeot started with the 406 model in 1995 with the front end, adopting almond‐shaped headlamps in place of the previous rectilinear designs. On the rear, the total red color and the perfect homogeneity were adopted. Both designs are now recognized identification attributes of the Peugeot brand name. The newest models 207 & 308 are the best examples.

The perceived quality is a key point for Peugeot. On lighting parts, it means:

- Lens transparency - Internal headlamp or rear lamp: Bezel, material appearance, coherence - Periphery, gap between lens and body, integration in the body


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- Switch on appearance which is the revolution of perceived quality. Technology and style are going together.

- The headlamp is becoming the lever to show technology and style. This is now the priority of Peugeot. We want to give a night‐time signature from the headlamps. You will see how very soon”.

J.Gallix considers the style like a number 1 condition but it not enough. The style needs technical innovations. It is the consequence of an exchange with engineering, production, marketing and international departments. The designer has to do the synthesis of all these needs”.

Performances/Technology

Since 2006, Peugeot is making after the style, a priority of good lighting performance

Since 1995 Peugeot cars have not had the best performances because of size constraints in conjunction with the rejection of Xenon and projector technologies.

However, the latest new models now use advanced Complex Surface Lens swiveling Bi‐Xenon headlights.

These headlights offer a bluish white light similar to the light of the day and can triple the light output of a standard lamp, for improved driving by night.

They are provided with a dipped headlight swiveling function which gives improved viewing on winding roads. Servo controlled by the vehicle speed in a range between 5 and 160 km/h to adapt to different conditions of use, the headlights can swivel to 15° outward and 7° inward).

This function provides the pleasant impression that the system anticipates the next bend, thus

making driving by night safer and more comfortable.

Peugeot are rapidly adopting driver assistance technologies and automation

• Brake Assist System: Brake Assist System helps the driver under severe brake application. Braking pressure is increasing beyond that generated by the driver’s foot pressure, so the stopping distance is minimized. Peugeot started this technology in 2006 on the 307 with Bosch.


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• Automatic hazard warning light: Automatic hazard warning flashers are automatically activated under hard braking, to alert surrounding drivers to the panic‐stop situation.

• Automatic switch on of LowBeams by night: The vehicle’s headlamps are automatically activated when ambient light levels drop, not just at night, but also when entering tunnels.

• Followmehome program: Follow‐me‐home lighting system keeps the headlights lit for a preprogrammed time after the driver leaves the car at night.

• Lane Departure Warning System. Peugeot, with help of Valeo, has equipped its 308 with the LDWS, a system capable of warning the driver of an unintentional lane departure. Six infrared sensors, installed behind the bumper, monitor the road and detect crossing of the white line. If the vehicle crosses a continuous or discontinuous line, the information is transmitted to a monitoring computer which trigs the driver warning from a vibration of the seat.

• Structural safety technology: PSA’s new cars like the 308 are structurally designed to dissipate the energy of an impact in a programmed manner. It incorporates a number of developments such as the presence of a triple impact absorption structure, to achieve higher safety objectives. This provides maximum protection for the passenger compartment and its occupants limits the consequences of an impact with a pedestrian and facilitates repairs; which obviously has a direct influence on the cost of car insurance for the user.


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Peugeot cars in production and lighting suppliers

107 Front:Valeo Rear: AL

207 Front: Valeo Rear: AL

308 Front: AL Rear: AL

407 Front: AL Rear: Valeo



1007 Front: Valeo RL: AL

Expert Front: Valeo Rear: AL


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Concept cars gather feedback and guidance from customers

Starting with the Quasar unveiled in 1984, Peugeot’s concept cars have facilitated the exploration of many new ideas. The image of Peugeot, the lion brand, has greatly benefited from innovative demonstrator models. Teaser models have also generated intense public interest, which in turn creates demand for new types of vehicles. For example, the 20♥ show car of 1998 paved the way for coupé cabriolets to enter volume production.

Equally beneficial have been show cars like the 607 Féline, the 907, and the 908 RC. These have returned Peugeot style to the public fancy. Since 2000, the brand has invited public participation in its fascination with concept cars through the Peugeot Design Contest for young designers. The winner sees a full‐scale representation of his or her project built and unveiled at an international motor show.

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The 308 Coupe RCZ shows what will be the 307 successor.

Styling design is largely taken directly from the 308, but with a sharper and sportier lower panel incorporating the single air intake, chrome front grille, and well‐integrated front lights. The model bears some resemblance to Audi’s TT.

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11 LIGHTING AND DRIVER ASSISTANCE AT CITROËN

After 10 years as follower, Citroën is becoming a leader in some technologies

Until 1990, Citroën was a worldwide leader in lighting performance.

The 1967 DS was a fantastic start in lighting superiority, with its steering high beams. The 1970 GS and the 1974 CX were benchmarks of headlight performance due to their lamps’ large active optical areas.

In 1989, Citroën adopted Valeo’s new complex surface reflector technology to provide best‐in‐class headlamp performance from the new XM’s very small headlamps. Citroën’s lighting leadership, like Peugeot’s, began to lag by the mid‐1990s. But like Peugeot, Citroën are aggressively and swiftly moving to regain their top slot in the area of lighting and driver assistance by using some high tech systems like AFIL, the first one on Lane Departure warning.

Gilles Michel is the boss of Citroën G. Michel, who previously was responsible for PSA platform strategy, now heads Citroën since February 2007, when he replaced Claude Satinet. His two main objectives are to boost sales without decreasing margins, and to improve communication within Citroën.

Vincent Besson is the new product director Vincent works for Citroên but he reports to G.Olivier in charge of PSA programs in order to move faster with fewer decision stages.

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Products

The new C5 embodies the Citroën style.

‐ Since Product development for Citroën and Peugeot are centralized within PSA, there are 2 groups dedicated to Citroën, one is the Citroën product team, the other is the Citroën styling team under J.P.Ploué. These teams are focused on Citroën brand and belong to a larger division where all aspects of product development are concentrated.

‐ Targets of sales are the same as Peugeot: China, Russia, South America, Mexico and India.

Style

J.P.Ploué is the Citroën style director.

The new C5 with Ploué style is the vehicle which responds to customer expectations: elegant, distinguished,dynamic. J.P.Ploué searches for the future design, vehicles which are attractive and desirable instead with some strangeness like in the past. The perceived quality will be a must with some fluidity, pureness and simpleness. He considers perceived quality a top priority, and lays out three prime directives for suppliers:

• Quality and precision of the contour and body fitment.

• Fluidity of the external surface.

• Jewel effect inside the product.

The new C5 with Ploué style is the vehicle which responds to customer expectations: elegant, distinguished, dynamic.

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In sum, Ploué’s new Citroën style culture is a permanent revolution, keeping the genetic code that has attracted and retained Citroën buyers for decades.

Performances/Technologies

Since 2006, Citroën are prioritizing lighting system performance

Since 1995, Citroën cars have not offered the best in lighting. Small lamps not using the latest technology have not kept up with competitors’ adoption of Xenon, projector, and AFS head lighting.

But the latest new models now incorporate top‐spec complex‐surface swiveling BiXenon headlamps. The C4, in fact, was the first PSA car equipped with dual‐function directional xenon headlamps.

Electronically‐controlled dual‐function directional xenon headlamps ensure maximum light coverage on bends. As the driver approaches a bend, the system’s sensors analyses the position of the steering wheel to detect the direction of the road wheels.

To ensure that the road ahead is lit as effectively possible, these headlamps swivel horizontally by up to 15°. Citroën was one of the first car makers to fit DBL, on C4, C5 and C6.

On Driver Assistance, Citroën is adding high technology to new models

• Brake Assist System: Brake Assist System helps the driver under severe brake application. Braking pressure is increasing beyond that generated by the driver’s foot pressure, so the stopping distance is minimized. Citroën started this technology with Bosch on the C3.

• Automatic hazard warning light: Automatic hazard warning flashers are automatically activated under hard braking, to alert surrounding drivers to the panic‐stop situation.

• Automatic switch on of LowBeams by night: The vehicle’s headlamps are automatically activated when ambient light levels drop, not just at night, but also when entering tunnels.

• Followmehome program: Follow‐me‐home lighting system keeps the headlights lit for a pre‐programmed time after the driver leaves the car at night.

• Lane Departure Warning System. Citroën, with the help of Valeo, has equipped its C4, C5, C6 with the LDWS, a system capable of warning the driver of an unintentional lane departure (AFIL system). Six infrared sensors, installed behind the bumper, monitor the road and

C4 equipped with directional Xenon light

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detect crossing of the white line. If the vehicle crosses a continuous or discontinuous line, the information is transmitted to a monitoring computer which trips the driver warning from a vibration of the seat.

Parking Assist: The first worldwide Parking Assist System was on the C4 model year 2006.

The system, supplied by Bosch uses sensors built into the rear bumper which detect obstacles close to the vehicle.

Proximity detectors emit a series of warning beeps as the vehicle approaches an obstacle. These beeps increase in frequency and become a continuous signal when the vehicle is just a few centimeters from the obstacle.

Similar sensors built into the front bumper warn the driver of obstacles within the detection area.

Headup display in the topmodel C6

The C6 is the first Citroën to feature a system that is still rare in the automotive market: a head‐up display. Key driving information, such as speed and navigation data, is projected onto the windscreen in the driver's direct line of sight.

The head‐up display makes a significant contribution to safety with its direct read‐out. Drivers assimilate data more quickly without taking their eyes off the road. A total 0.5 seconds are saved, based on the time taken by drivers to look away and adapt their vision.

Virtual image behind the windshield

The 2 steps to park

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Citroën cars in production and lighting suppliers

C1 Front: Valeo Rear: AL

C2 Front: Rear:

C3 Front: AL Rear: AL

C4 Front: Valeo Rear: Visteon

C4 Picasso Front: Hella Rear: Hella

C5 Front: Valeo Rear: Visteon

C6 Front: AL Rear: AL

C8 Front: Valeo Rear: AL

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Concept cars

C5 Airscape features powerful, dynamic exterior,

made for driving pleasure. Styled for maximum appeal, C5 Airscape also delivers maximum performance. It is a significant hint at how the next C5 will look.

Front with big brilliant shield occupying half reflector surface

Rear with 2 horizontal LED lines of pink aspect

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C.Cactus, Citroën focus to technology and style

Citroën unveiled C‐Cactus at the 2007 Frankfurt Motor Show. This ingenious concept is a new take on vehicle design, centred on essential values. This ingenious concept is a new take on vehicle design, centred on essential values. The ambition is to market an eco‐friendly hatchback with cheerful, attractive styling. Citroën have decided to focus on technology, styling and equipment that are positive, ecological and valued by users. The front and rear lamps have similar contours to highlight the technology they incorporate.

Front with 2 projector modules

Projector module for Low Beam.

A 2nd projector module for Position Light (or Direction Indicator function).

Upper part and external part of the lamp are surrounded with a light guide.

Rear with transparent and integral red surrounded bt LED line

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CMatisse

A coupe of elegant design and an excellent lighting.

The design lines of C‐Métisse reflect the quest for outstanding aerodynamics, integrating the latest technological developments. Positioned either side of the double chevron badge on the radiator grille, the headlamps are equipped with a row of LEDs that light up progressively, depending on the steering‐wheel angle and vehicle speed. This feature ensures excellent lighting when driving on winding roads by night.

The C SportLounge reflects Citroën style

The C SportLounge combines sporty driving style with high levels of onboard quality.The noble styling of the C SportLounge's bodywork is pleasing to the eye from the first glance. Pure, assertive lines perfectly reflect Citroën's style themes.

Boomerangshaped LED headlamps part of Citroën style

The powerful design of the front and rear ends gives the vehicle a determined, powerful appearance. The concept car has boomerang‐shaped LED headlamps and two chrome exhaust pipes.

CAirlounge, the art of synthesis in design.

C‐Airlounge illustrates the art of synthesis in automotive design, long an objective actively pursued by Citroen. The design lines of the front‐end express both purity and strength.

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CAirlounge, delivers optimized light with Xenon swiveling beams.

The determined look‐end appearance of the C‐Airlounge is enhanced by the wide air intakes and clearly defined headlamps, offering a promise of performance.

The swivelling beams of the headlamps provide optimised lighting for night driving on winding roads, a feature that brings a considerable improvement in safety.

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The "Conservatoire"

The role of Le Conservatoire is to promote the image of the Marque and to make employees more aware of the need to preserve the vestiges of the past. The centre collects and maintains examples of the Citroëns produced since 1919 to the present day, and also manages all the Marque’s archives. Officially inaugurated in late 2001 in the presence of P. Peugeot, chairman of the PSA Peugeot Citroën supervisory board, and C. Satinet, managing director of Citroën, this building is dedicated to Citroën as a trend. Every single document and object under its roof reflects the history of Citroën’s soul and achievements, from the very first Type A to the ZX Rallye Raid, a wind tunnel. Le Conservatoire houses 300 Citroën models, together with a range of objects and archives relating to the Marque’s history.

Much of the collection will be seen in public exhibitions organized in France, Europe and elsewhere in the world.

Standing immediately next to the PSA production plant, Le Conservatoire blends in perfectly with its environment on the edge of the Aulnay‐sous‐Bois industrial park in the Paris region. When you first see it, it is difficult to guess what sort of objects may be stored on the 6,500‐square‐metre premises of Le Conservatoire Citroën.

Visitors entering the building will see that Le Conservatoire Citroën is split into two areas: 5,500 square meters for storage, and 1,000 square meters for working. The storage section has an area of 5,000 square meters for the 300 vehicles collected by the Marque — of which several were provided by Citroën Portugal and Citroën UK — and a smaller area for archives. The 1,400 linear meters of shelving in Le Conservatoire provides housing for design office sketches and plans, original styling drawings by Bertone, technical documents, displays, lithography, and other documents bearing testimony to Citroën’s ability to innovate in sales, advertising and industrial production.

The working area also comprises two sections: one for vehicle maintenance and one for model production — another activity conducted at the Conservatoire. Three people work at the new Aulnay‐sous‐Bois building, under the management of Denis Huille, Citroën heritage manager.

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PSA Prospects

3 strengths - CAP 2010 and Ambition 2015

Clear targets with 2007 results on line with these targets

- Implementations in China, South America and East Europe/Russia

China, South America and East Europe & Russia will represent a strong increase from 2008 to 2010 with no risk of Dollar weakness.

Sales of 1 million vehicles expected in 2010 .

- Politics of alliance with 6 main partners

Toyota, Mitsubishi, Fiat, BMW, Ford, Renault which permit to increase production capacities, portfolio of models and strengthen R&D activities.

3 weaknesses - No presence in premium cars where margins are higher

Poor image of quality after bad experiences with 605 and XM.

Low volume of premium cars 607 and C6.

- Image of a follower in technology

PSA is a follower on technologies because style priority. Examples in lighting with Xenon and Bending Light and now with LED technologies.

Image is changing in Lighting with AFS and in Driver assistance with Lane Departure Warning..

- Decrease of sales in West Europe difficult to reverse

Interviews

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INTERVIEWS

Driving Vision News has interviewed: Jean‐Philippe Collin

Jean‐Christophe Quemard

Jean‐Paul Ploué

Jerome Gallix

Gilles Boussac

Interviews

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JeanPhilippe Collin

Jean‐Philippe Collin, 52 has a master’s Degree in Electrical Engineering from Ecole Supérieure d’Electricité (Supelec). He began his career in 1982 with IBM, where he served as manager of a components procurement center in the United States and as chairman of one of the company’s Global Purchasing Councils. He was also in charge of the Technology and Quality Laboratory. In 1995, he joined Valeo as Vice President, Purchasing for the Electronics Division, before being promoted to Vice President, Purchasing for the entire Group. In 1999, he was appointed Senior Vice President of Sourcing for Thomson. In 2002, he was put in charge of the spring cost reduction program and later served as Senior Vice President, Integrated Circuits at Thomson Optical Systems. He was a member of the Thomson Executive Committee. On July 19th, 2004, he was appointed Vice President, Purchasing for PSA Peugeot Citroën, as part of the Group’s Platforms, Engineering and Purchasing Department. Since February 2007, Jean‐Philippe COLLIN is reporting directly to Christian STREIFF, Chairman & President of the PSA Peugeot Citroën Group. As such he is a member of the Extended Executive Committee. Starting January 1st, 2008, Jean‐Philippe COLLIN will be appointed Executive Vice‐President of Automobiles Peugeot, member of the PSA Peugeot Citroën Managing Board.

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uestion: Could you please tell us a little bit more about you, your hobbies, your tastes, and your passions?

“ I may not surprise you if I tell you that am truly a “car addict” spending a big chuck of my time on it: personally and professionally.

My family is balancing it helping me to relax and refocus on other matters like arts and travels. We do spend quite some time discovering together other places, other countries and other cultures”.

uestion: You have been working for a long time on Lighting. Lighting suppliers have lately shown poor profitability as a whole.

How do you explain this situation? What would be your message and advice to help them improving and succeeding with PSA?

“Not all of them are indeed losing money! Well managed companies focusing on innovation and industrial/operational efficiency are making money.”

uestion: What would be your message and advice to help them improving and succeeding with PSA?

“Keep focused on value innovation and codevelopment common efficiency”.

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JeanChristophe Quemard

Jean‐Christophe Quemard, 48 is graduate of Ecole des Mines de Saint Etienne and graduate of Ecole du Pétrole et des Moteurs, with a major in Economics and Management He joined PSA in 1986 to take various management positions in the Peugeot Manufacturing Division, first in Sochaux plant (Group orientation programme) then in Poissy plant (Production Engineering then Model Launch Planning and Quality). From 1995 to 2000, he took the head of Production Engineering Methods and Industrial Equipment Department. 2000‐2002 PSA Peugeot Citroën, Automobile Platforms and Technologies Department Manager, Logistics Engineering. R&D Manager for production plants outside France. From 2002 to 2007, Quemard was in charge of launching the 308, Peugeot’s No. 2 seller in Europe. He took over as head of purchasing at PSA January 1, 2008. Quemard is member of the Extended Executive Committee of PSA Peugeot Citroën

uestion: What do you retain from your Peugeot 308 project director experience, mainly about Lighting?

J.C.Quemard –“ In this project PSA worked with Automotive Lighting on headlamps and rear lamps. It was a big challenge because styling and fitting constraints had to be met together with a high target of lighting performances. We wanted to avoid the rather poor lighting performances of the Peugeot 307 facelift experience.

A new challenge had also to be considered: Pedestrian impact and ease of repair. In conclusion, styling, fitting, pedestrian impact and easiness to repair with good lighting performances were very challenging. During 2 years, I have been deeply involved to succeed these lighting targets.

I learned a lot during this time. “

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uestion‐ You talked about 15 key strategic suppliers selected by the middle of 2008 as they strive to lower costs and improve quality.

Did you already start the process and what is your target?

“We already engaged with 13 suppliers in 2008, and more in 2009, this specific process to improve partnership with some suppliers.

This new approach is based on a several year strategic frame partnership covering technological, industrial, economical aspects for mutual benefit…

I can tell you for instance, that I just signed with one of them such an agreement defining a technical and industrial roadmap covering several years, with key costs savings for PSA, as well as common innovation targets...

Believe me, if we get much more, our suppliers get better long term visibility as well...”

uestion ‐ You recently added a new supplier, the Japanese Koito on your lighting supplier panel. Why a 5th supplier?

“The range of PSA véhicles is now larger with shorter life times, and a bigger diversity of outlines. For each model, the design of new headlamps and rear lamps is involved and the cost of lighting components is increasing. There is room for all the actors willing to work with PSA.”

uestion Most lighting suppliers have been loosing money for many years. What advices could you give to those companies to react?

“Using my industrial experience and my 4 years experience as vehicle project manager, my 4 best advices could be:

1/ Industrial tool rationalization, lean manufacturing implementation and production unit’s standardization.

2/ Competitive data base development on components and also on toolings.

3/ Engineering expenses reduction from 3 ways. Development of standards, engineering components and engineering processes, High performance design tools. Low cost countries localization of low added value engineering ewpenses.

4/ Stronger innovation in technology and stronger creativity in styling.

The headlamps and the rear lamps are the jewels of the vehicle and the brand signature, mainly for PSA. Lighting suppliers have an immense field for progress and styling has to be their priority.

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JeanPaul Ploué

After 10 years at Renault, Jean‐Pierre Ploué worked three years with VW in Spain and two years with Ford in Germany. Since 2000, he’s been Citroën’s styling chief. He was just awarded “The man of the year” by France’s biggest motor magazine, Le Journal de l’Automobile.

uestion: what do you retain of this experience with Renault, VW and Ford? ”With Renault a great freedom of styling expression with great high styling knowhow

2 experiences about lighting at Renault:

The first one, with Twingo, we proved it is possible to design an innovative headlamp at a low cost. The second experience with the same functional product like a projector module, we can design a different appearance and the Argos concept car was an example…

About the 3 car makers, the design job is not the same because the cultures are different: Renault has a culture of creativity, VW a culture of quality and Ford a culture focused on the customer. We are in 2000. After 15 years styling experience, you are at the head of Citroen style department to reorganize the styling department and to give an identity and a strong personality to Citroen style.”

uestion: How did you combine Management and Creativity? How did you organize the 170 people including 35 designers?

” When I started in 2000 with Citroën, I used 3 steps to succeed: First, I had to choose the right people, then to build my team and its organization, and third, to motivate the teams with clear targets and the best tools. Now I can use most of my time pushing and promoting style. Now I can use most of my time pushing and promoting style.

PSA has always been working with 2 teams competing on style about any new model. In the past it was on external team, mainly Pininfarina and an internal team. Now most of the time, competition is between 2 internal teams.”

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uestion: Are you able to continue with a so heavy organization?

At Citroen we are now working with one unique team.

We stop working with an external team because we consider they have not anymore the technology we are expecting.

We now also stop working in two teams for resources reason.

PSA want to develop specific models for the low cost countries mainly in China.

uestion: How do you organize your teams? Part of the team isit in China? There is no team and no studio in China. Products are developed by teams who spend some

time in China to better understand and integrate the special needs. Then the development is done in Velizy

uestion: What are the words which define the best what you want a Citroen car is? Fluidity. Elegance. Humanism. Magic. Surprising. Non conformism, Well‐being. French touch.

With the C4 Picasso and C5, you have done a so important step as DS. Citroen has now a personality like BMW has had a personality with Chris Bangle.

uestion: Are you close of Chris styling job? ”Chris has done an excellent job changing the conservative BMW style in spite of internal

oppositions. From my side I did not meet any opposition and my job was easier. The results are the same about the deep change. BMW has now a BMW styling, Citroen is going to have a Citroen styling”

The C6 is a very beautiful car on line with all the words to characterize a Citroen car.

uestion: How do you explain its relative failure? What experience do you retain to succeed Citroen high range car?

”Maybe it arrived a little early. Nevertheless it is a elitist car and it is an element to build the styling brand.”

Perceived Quality, Lines and surface justness are primordial for you.

uestion: What is perceived quality at the level of headlamps and rear lamps? ”Perceived quality is a top priority, and lays out three prime directives for lighting suppliers:

• Quality and precision of the contour and body fitment. • Fluidity of the external surface. • Jewel effect inside the product.

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The style and the environment are 2 priorities for Citroen. LEDs go in the 2 directions: they propose a new style and reduce energy consumption.

uestion: Do you expect to use more LEDs in the future?

”Citroën use LEDs on the rear lamps of the CCrosser, but more often we use tungsten bulbs with LED styling aspect, as on the C5, or light guide aspect as on the C4 Picasso. I see functional separation as a possible Citroën styling trend; for example, fog lamps may be moved out and away from the main headlamp assembly.”

A lot of technologies are presented to car makers.

uestion: What technologies do you expect from your suppliers? ”In the near and midterm future, I expect supplier to provide innovative lighting devices with

novel appearance and reduced packaging depth.”

uestion: Are you working on a night time signature?

”We are working on the research of Citroen identity and we have already obtained some results with the “sourcil boomerang” on the headlamps. Nevertheless we do not want to have the same models like Peugeot, Audi or BMW. We want a permanent revolution with the same genetic code.

In summary, for J.P.Ploue, the new Citroen style culture is a permanent revolution, keeping the same genetic code that has attracted and retained Citroën buyers for decades.

Ploué says in the near and midterm future, he expects suppliers to provide innovative lighting devices with novel appearance and reduced packaging depth.

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Jerome Gallix

Jerome Gallix, 43 is the new Design director of Peugeot since July 2007.

He started in 1989 at Peugeot to implement the numerical tools to help designers. Then he worked on the design of the 206 and the 406 before building his independent design studio. He returned to Peugeot in late 2002 as Welter's replacement.

uestion: What does Gallix retain of his independent design firm? “It was a Design Office working mainly for Peugeot and Mercedes during 7 years.

First, I was impressed by Mercedes’ speed to take a decision and stick to it without changing this decision. These 2 points are essential to go rapidly in the job.

An example about Headlamps:

On a project, it was very difficult to introduce the headlamp in the body because there was not enough room. Too many suppliers search to explain why it is impossible to succeed. In contrast, the suppliers of Mercedes engage all the needed resources to succeed in the challenge. So, it becomes easier to succeed”.

uestion: What will stay the same and what will change on front end after G.Welter left? “No change on the front end; we will not touch the headlamp design. Gerard referred to it as

the eyes of Sophia Loren. I tend to call it the eyes of Monica Bellucci. I will introduce more harmony in Peugeot's design. The brand's aggressivelooking grille may be softened but the headlights will remain untouched. It is always difficult to change things overnight.

uestion: A GM survey shows the style is number 1 criteria for choosing a car. What is your feeling?

“I consider the style like a number 1 condition but it is not enough. The style needs technical innovations. It is the consequence of an exchange with engineering,

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production, marketing and international departments. The designer has to do the synthesis of all these needs”.

uestion: What is the perceived Quality for headlamps and rear lamps? “Many times, it is what is visible of the real quality.

The perceived quality of lighting parts is a key point for Peugeot. It means: Lens transparency Internal headlamp or rear lamp: Bezel, material appearance, coherence Periphery, gap between lens and body, integration in the body Switch on appearance which is the revolution of perceived quality. Technology and style are going together. The headlamp is becoming the lever to show technology and style. This is now the priority of Peugeot.. We want to give a more signature from the headlamps. You will see how very soon”.

uestion: What advices could you give to lighting suppliers? “I have 2 important advices for these lighting companies:

1) Put the priority to reduce volume and mainly depth. There was not in the last 5 years any innovation on depth reduction of headlamp compared to the packaging reductions of other components. The target of LED has to be depth reduction before styling and performances. What I want is a small functional light to save room and a styling appearance around this functional light 2) Never say “it is impossible” or “it is too expensive” in front of an innovation mainly when it is a lighting innovation. Work on it; make a mockup, present it to customer and then the decision to stop or to continue will be taken by both car maker and supplier.

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Gilles Boussac

Gilles Boussac was born in 1960. He graduated as an Engineer from Ecole Polytechnique and the Ecole Nationale Supérieure de Techniques Avancées (ENSTA).

As a PSA man since ever, his experience extends across design office and product planning, production, marketing and sale.

In 2004, he joined DPCA in China, a JV between PSA and Dong Feng

Since 2007, he is at the head of Peugeot Product & Marketing

uestion: could you please tell us a little bit more about you, your hobbies, your tastes, your passions ?

”As a matter of fact, I’m found of interior architecture and decoration, and have an attraction for all forms of art. As I have been working and traveling extensively through out the world, I have also been developing my curiosity for new cultures and new places.”

uestion: What do you keep in mind from your different experiences in Rennes (French Britany), Paris and China, satisfactions as well as regrets?

”I mainly retain:

A lot of different experiences which helped me building myself as a person, both as a professional and as a human being

The keystone importance of interpersonal relationship to build a collective success, whatever the cultural differences might be

A few beliefs: no achievement is forever, keep on asking people to deliver what’s required, build a team, hate passivity and artificial dominion battles (having experienced various positions in the organization allows you to become a master in dealing with the neural network of the company).

You have been working for a long time on Lighting.

uestion: Lighting suppliers have lately shown poor profitability as a whole. How do you explain this situation? What would be your message and advice to help them

improving and succeeding with PSA ?

”I have always had a particular taste for lighting equipments, front projectors or rear lamps, which have been essential since ever as style signatures for our Peugeot cars. With the launching of our Peugeot 406, there was perhaps a technological turn (size of headlamps pieces, rearlamps depth effects…).

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I have been experiencing during those last years, as well in China as in Europe, a lot of difficulties with our lighting equipments supplier partners to meet our requirements whether in terms of quality and aspect, or in terms of delivery schedules…

We sometimes were expecting them to be more than a simple equipment supplier; we were expecting an automotive lighting expert able to contribute actively to the carmaker choices. I have the feeling we have been faced with a loss of technical knowhow on their side when the lighting equipments became more and more sophisticated. It also seemed to me that a certain number of suppliers lacked the ability to manage their full manufacturing environment, and more specifically their tools and machines suppliers, etc.. Hence some of their problems.”

Lighting and driver assistance technologies can give Peugeot good leverage to promote its values, in its middle range through genuine design or options, in its premium offer through advanced new technologies the way the German carmakers like Mercedes, Audi, BMW, but also VW and Opel are now addressing their market.

uestion: As Peugeot Product Manager, what are your expectations as far as Lighting and driver assistance are concerned?

”My expectations are very high…for three main raisons:

° Style: projectors and rear lights are key esthetic identification attributes of our car models ° Safety: a major value for a brand name like Peugeot, via extended lighting performances like Xenon or swiveling lights and via driver assistance systems like LDWS, Automatic hazard warning light or Automatic switch on of Low beam ° Technology: the advanced technological image carried through this type of new functions.”

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