A quarter of a century ago, Ari Vanaten attacked Pikes Peak in the legendary Peugeot 405 T16, and the resulting footage of the attempt led to the renowned documentary “Climb Dance”.  For 2013, Peugeot will be back at Pikes Peak with the appropriately named 208 T16. Piloting the 208 T16 will be WRC ace Sebastian Loeb, which should make the 208 T16 a formidable contender on that basis alone.

The MPV segment, so popular in Europe, was basically invented by the French. The Renault Espace, the grandfather of the modern minivan, was originally supposed to be a Peugeot, until PSA deemed it too expensive and sold it to Renault. Nearly two decades later, Renault disrupted the segment again with their compact Scenic minivan, which spawned imitators from nearly every single brand.

Citroen’s newest MPV, the C4 Picasso, is a massively important car for PSA and the French car industry. It’s not as sexy as the Renaultsport or Alpine products coming down the pipeline, nor does it have the enthusiast-weirdo cachet of previous PSA products. But this car will be one of the products that determines PSA’s future. Having missed the boat on making a push in the low-cost segment, the C4 and the Peugeot 208 will define the next generation of PSA products, as the two brands attempt a convoluted re-positioning in the marketplace.

The Picasso is the first car to ride on PSA’s new EMP2 modular architecture. The Picasso will be chock full of PSA’s latest tech, from blind spot cameras to massive touchscreens to adaptive cruise control. New diesel powertrains will offer in excess of 70 mpg on the European cycle and C02 emissions on par with a Toyota Prius; not hugely exciting, but if you ever hail a cab in Paris, you’ll probably be riding in one of these.

PSA desperately needs to C4 to succeed. As the test best for their next generation architecture, the future of PSA hangs in the balance. Strong sales will mean a whole new generation of EMP2 based vehicles. Failure could entail another bailout or worse.

PSA announced their renewed brand strategy for their Peugeot and Citroen lines, and the situation has finally been clarified after frequent back and forth reports that contradicted one another. It turns out that PSA will employ a three-tier approach that is equally confusing, with Citroen as the lowest tier with Peugeot on top. But then there’s also Citroen’s DS line, which is supposed to be upscale itself. Confused? So are we.

A hand cheat sheet provided by PSA to Automotive News Europe outlines the “values” supposedly embodied by both Citroen and Peugeot.

PSA CEO Philippe Varin recently outlined the new product strategies for Peugeot and Citroen like this:
Citroen stands for:
Fuel-efficient and environmentally friendly cars
Easy-to-use, less sophisticated technology
Purist design
Peugeot stands for:
Perceived quality and reliability
Elegant, dynamic designs that stand out from the crowd 
Innovative driving experience and driving pleasure

PSA was adamant that Citroen was not going to become a low-cost brand, but the next generation of vehicles will be positioned slightly lower than the current range. Does that mean the Hydramatic suspension, one of the brand’s hallmarks, will be gone? Let’s hope not. What will be happening is that Citroen vehicles will be positioned as “cheap premium” (whatever that means), with Peugeot being “premium” and to top it all off, Citroen’s DS line will be positioned as an even more premium range relative to Peugeot, if Automotive News has it right, which is difficult to ascertain, since PSA seems to change its positioning depending on what day of the week it is.

Further complicating matters is Peugeot’s schizophrenic offerings, including the low-cost 301 sedan which will be sold in emerging markets as a premium vehicle relative to the other low-cost competitors, if you buy into PSA’s spin. It’s a tough one to swallow, considering that Renault has poured so much time and effort into Dacia for the precise reason that the low-cost and premium brands should not mix.

Keen French car observers will also note that the brand values espoused here are backwards. Traditionally, Citroen had the elegant, dynamic designs and wild new technologies, while Peugeots were rugged and simple enough to endear themselves to the pied-noirs of Africa. Outside of France and Africa, Peugeot’s profile is basically nil – if the Citroen C6′s poor sales were an indication of how poorly premium French cars were received  then the Peugeot 607 large sedan may have been the only offering to fare even worse, ending up largely in the hands of cab drivers.

The most succinct analysis of it all comes from Fitch Ratings, which noted

“We believe this strategy makes sense overall but carries substantial execution risk and could take many years to bear fruit. In particular, we are concerned that the existence of both entry-level/basic models and aspiring higher-end products within the two brands will not be easily understood and accepted by customers.”

Last month, we suggested that PSA’s new compressed air hybrid system was a good way for PSA to drum up some investment into its ailing new car business. Now comes word that PSA wants to talk to other car makers, including alliance partner General Motors, about pooling the R&D cost of the new tech.

Given that PSA spent an estimated $4 billion on R&D in 2011, the $650 million cost to develop the new technology is a relatively modest sum. Yet PSA is still looking for a partner (or partners) to help bear the burden. PSA is looking to get cars using the technology, dubbed HybridAir, on the road by 2016, a very short timeframe for a new technology, especially one as radical as this.

PSA is also looking for a partner for the technology in China. Meanwhile, GM issued a statement claiming that the new hybrid system “is not part of the alliance discussions”. Bosch, which has assisted PSA with the initial development of HybridAir, previously warned of “unspecified technical challenges” with the system, throwing further doubt on the viability of the technology as a real automotive solution. Evidently, it doesn’t seem to be doing much to bring some badly needed money in either.

A bit of light reading for everyone wishing they were in Geneva, munching on some pain au chocolat while paying $8 for a Nespresso. CAR magazine contributor Stephen Bayley has a very entertaining essay entitled “The End of the French Car“, in which he laments the demise of the quirky, compact French automobile.

Bayley’s thesis is that once France lost it’s cultural capital, the cars began their inevitable decline

When did the decline start ?  Back in those first paragraph student days, I could sit on a train for thirty-six hours to Madrid and have for company only my French philosophers and the latest copy of Auto Journal with all its fabulous news of new French cars with oleo-pneumatic suspension and strange seating arrangements.  Who can say whether it was cause or effect, but when French culture as a whole lost its authority, the cars became boring.  Who reads Sartre today ?  Exactly.

Sure, the death of the Citroen C6 was a bit of a turning point; the large French luxury sedan with superb ride quality and great design (and admittedly, not much else) had finally lost any relevance in the wider marketplace. But I’m not so sure that it’s time to bury French cars for good.

The Renault 4 and Citroen 2CV that Bayley venerates are no longer with us, but in their place, we have the Dacia. Not as quirky or memorable, sure, but designed to fulfill the same promise of cheap transportation for those who may not have been able to afford a new car. The Peugeot 205 GTI may be dead, but just around the corner, there is a Peugeot 208 Hybrid with a two-cylinder engine that will hit 60 mph in about 8 seconds (roughly the same as a 205 GTI, maybe a bit quicker, depending on who you ask) and weighs a couple hundred pounds less than the 205.  If anything, the demise of French cars won’t come from a lack of competent product, but market forces that have little to do with the cars themselves.

An invasive species originating in North America is threatening the native fauna of Europe in a big way. Small crossovers, largely based on B and C segment hatchbacks, are one of the few growth segments in Europe’s ailing auto industry, so much so that they could even help reverse the fortunes of a couple ailing auto makers.

Peugeot and Renault, two car makers that have struggled in recent years, are expected to post big sales volumes of their upcoming small crossovers. One forecasting house predicts that the Renault Captur and Peugeot 2008 will even bump the current segment leader, the Nissan Juke, down to third place. Meanwhile, Ford is counting on the upcoming EcoSport for both volume and margin, thanks to its assembly in India.

By 2016, the segment is set to grow to 550,000 vehicles, up from just under 300,000 in 2012. The vehicles will be very profitable for auto makers, as they can charge a $3,900 premium on average for a car that uses the same basic B or C segment underpinnings. Furthermore, traditional market leaders like VW, Toyota, Honda and Hyundai are largely devoid of any product in these segments, giving PSA, Renault, Ford and even GM a wide berth to capture market share in this segment.

The French government is planning on raising taxes on diesel fuel, branding it a “health issue”, much to the chagrin of consumers and the country’s auto industry.

France’s environment minister, Delphine Bartho, told French radio (via Bloomberg) that a study by the WHO showed that diesel fumes presented a significant health hazard, and the French government would move to raise taxes on the fuel to help soften demand.

“It’s inescapable,” Batho told RMC radio today when asked whether lower taxes paid on diesel compared with gasoline should be eliminated. “I am favorable. It’s a public health issue.”

Currently, diesel is about 20 cents cheaper per liter than gasoline, but France’s new tax regimen would bring diesel costs in line with gasoline. Originally, diesel was taxed at a favorable rate due to its use in farm equipment and heavy-duty vehicles, but the lower cost led to a massive shift towards diesel powered passenger cars. 73 percent of cars sold in France last year came with a diesel engine, compared to 55 percent on average in Western Europe.

Renault and PSA have been less than enthused with the new tax hikes. PSA is one of the world’s largest producers of diesel engines, and had criticized the studies cited by the French government, with PSA’s Director of R&D, William Faury, stating that they ignored modern particulate-filter diesel engines in favor of old-style engines.

The problem is not the diesel engines on sale now, but the pre-filter era diesels. Current Euro 5 standards for diesel engines are exceedingly tough, and PSA already has diesel powered models capable of emitting a Prius-like 100 grams of CO2 per km. PSA’s aggregate CO2 emissions level for its fleet of cars is already the lowest in Europe, at 122.5 grams per kilometer, just ahead of Toyota. And thanks to the upcoming Euro 6 emissions standards, that number should fall, as diesel NOx emissions are required to be aligned with those of gasoline engines.

While the government may be genuinely concerned about the health of its citizens, it’s hard not to see this as another cynical political calculation, similar to the now shelved plans for extremely high tax rates on France’s top earners. A hallmark of ineffective government is the use of dramatic, headline grabbing solutions, which are little more than PR stunts and rarely mistaken for solid governance. Despite the posturing of France’s current administration. A La Tribune columnist noted that the Environment minister herself admitted that diesel engines from a decade prior are the real problem, since they can emit as much as 30 times more pollution than the current crop of diesels.

To add to the matter, both PSA and Renault are in a precarious position. TTAC readers will know that the French government has been marshaled to help provide de facto bailouts to PSA and quell the ongoing labor disputes between the French auto makers and the myriad of unions entrenched in their factories. With Europe’s new car market already hanging by a thread, the diesel tax comes at a particularly bad time for France’s domestic auto industry.

Prevailing wisdom today holds that small cars, manufactured in developed economies are some of the least profitable cars in existence. So why do companies like Peugeot, Citroen and Renault persist in producing them?

In article in La Tribune (France’s leading business paper) explains why. Once upon a time, when Giscard d’Estaing ruled and the Fifth Republic was just being digested after a spicy summer of 1968, France decided to tax big cars, in the name of Liberté, égalité, fraternité. Since the biggest market for French cars was France, Renault, Citroen and Peugeot decided to switch to producing small cars – the Citroen SM was a footnote, rather than a mainstay of France’s auto industry, despite what the buff books tell us.

Up until recently, things were tries bien. Renault, for example, sold nearly half a millio Clio and Twingo models in 2012 alone. Not bad for a company that mostly plays in Europe, but these cars are also not so profitable. Renault is able to produce these cars in Turkey and Slovenia respectively (with some Clio production still kept in France) which takes away some of the sting.

Over at PSA, things are much more dire. Small cars (B and C segment, for clarification’s sake) make up about 45 percent of their sales, but a good chunk of them are built in France. Workers there earn 35 euros an hour, compared to 22 in Spain and just 10 per hour in Slovakia. PSA’s CEO told La Tribune that a new Peugeot 208 built in Slovakia would save an astonishing 700 euros per car, along with the contentious labor negotiations that go hand in hand with French organized labor. At Renault, the cost difference is even more staggering, with 1300 euros saved on the Clio when it’s built in Turkey. Any surprise that since 2005, both companies have cut their domestic production in half? The strong social safety net and egalitarian society designed to protect the workers has ultimately resulted in a contribution to their declining fortunes.

Ironically, the small car segment, for all the talk about shrinking profits, is growing in France. Registrations have continuously increased since 2007, from 45 percent of all cars to 53 percent in 2012. But the only way for car companies to make any money is to wither away domestic production in favor of the Dacia approach; old technology, no frills packaging and ultra-low cost production in developing economies. So far, only Renault has this capability. PSA is trying it’s hand at the Fiat and Mini approach, positioning Peugeot and the Citroen DS line as “premium” small cars, in the hopes of squeezing some more margin from their products. Given the increasing stratification in the European car market (where only the high and low ends can make any money) it is a risky approach. But not everyone wants to drive a Dacia, and not everyone can afford a Benz.

What would you say to a hybrid B-segment car that weighed 1700 lbs, emitted half the carbon emissions of a Toyota Prius and still hit 62 mph in 8 seconds?

In a couple weeks time, Peugeot will debut a new version of their 208 subcompact, dubbed the HybridFE. The starting point is a base 208 with a lethargic 1.0L 3-cylinder engine making 68 horsepower. With a 14 second 0-60 time, one could read an entire Foucault book on the construct of the sociosexual panopticon and still just hit 58 mph.

But Peugeot, channeling Chapman, has ripped out 440 lbs from the car, bringing its curb weight down to about 1700 lbs, from the base car’s 2150 lbs. A hybrid system, an automated manual gearbox, low-rolling resistance tires and a special aerodynamics package have been added to help increase efficiency and aerodynamic properties.

The end result is still a 68 horsepower 208, but one capable of a very respectable 8-second sprint to 62 mph, while emitting just 49g/km of CO2 – about half of what a Toyota Prius emits. For comparison, vehicles than emit less than 100 grams are eligible for exemption from the London congestion charge, since they are considered low emissions.

The one caveat here is that Peugeot hasn’t released any pictures so far. Nevertheless, it’s nice to see that light weight engineering is far from dead. It’s certainly more realistic than their compressed-air hybrid system.

Despite a plan for a financial turnaround by 2015, PSA projected a cash burn rate as much as 1.5 billion euros  for 2013. Meanwhile, PSA’s finance arm had their bonds downgraded to junk status.

The downgrading of Banque PSA’s bonds by Standard & Poor’s is yet another blow for the French automaker, which reported record losses this week. One positive development for PSA was a labor agreement with workers at the troubled Aulnay plant, which allowed PSA to start winding down production ahead of schedule.

Meanwhile, French paper La Tribune shed some more light on PSA’s new brand strategy going forward. Initial reports suggested that Peugeot would move upscale, with Citroen remaining in its current place, but La Tribune now claims that

Citroën and should move at least partially to models simpler, more affordable, while its DS range must occupy the high ground. Peugeot remains in place somewhere between the two

We’ll have the story straight as soon as possible. But as Jimmy Buffet famously said, it’s 5 o’clock somewhere, and in France, the work day is definitely over right now.

Stop us if you’ve heard this one before. Unlike the poorly interpreted plans for Mazda to be a “premium” brand, PSA really is planning to take Peugeot upscale, despite having zero brand equity, an upscale Citroen line and zero exposure to the profit center of the future, low-cost cars.

The announcement came as PSA announced a record $6.7 billion loss for 2012, compared with a $588 million profit in 2011. PSA also laid out its plans for a recovery, including the baffling upscale move for the quality-plagued Peugeot brand.

Automotive News reported on the developments, quoting PSA CEO Philippe Varin

“The Peugeot brand will move toward a more modern image,” led by the 208 subcompact’s high-performance GTI version and the new 2008 SUV-styled crossover, Varin said. “In 2013, the positioning of our brands will be supported by a very rich range of products and 17 vehicle launches,” he said.

Despite being fetishized by North American euro-philes, Peugeot is on the cusp of irrelevancy in the European car market. While they have had some success with their B and C-segment offerings, the market for D-segment and above sedans has been moribund since Mitterand was in the Élysée Palace, serving mostly as minicabs in third-rate British towns and transportation for the bad guys in Ronin. The notion of Peugeot as a premium brand is laughable, and complicated even further by their intra-group rival Citroen.

At the turn of the decade, Citroen launched their DS line of premium hatchbacks, models which won critical acclaim but have still yet to set the sales charts on fire (the DS5, above, is the ride of choice for France’s Prime Minister). That will leave PSA with two brands which are aspiring to play in the premium segment, but without any sort of strategy for a low-cost brand to be sold both in Europe and developing markets – a strategy that has helped Renault-Nissan reap fat margins even in the current lean times. Unbelievably  this strategy is a central tenet of PSA’s recovery plan, which was demanded in exchange for government help for its financing unit.

Among the other stipulations include targeting for 50 percent of its vehicles to be sold outside Europe by 2015 (a tough one, in light of having no low-cost product to sell in developing markets), doubling production volumes via its alliance with GM, and achieving a 13 percent market share in a market that PSA assumes will hold at 2012 levels of car sales. In the words of one Credit Suisse analyst ”Both look unlikely now”. Given that the writing is on the wall for a continued decline in European new car sales it’s impossible to fathom how PSA could present these plans with a straight face.

But for a company like PSA, 2015 is a long way away. Let’s see if they make it through 2013 without becoming partially state owned, and then take it from there.

After approving a $1.6 billion loan guarantee for PSA’s captive finance arm, the European Commission demanded a restructuring plan for all of PSA within six months.

Reuters quotes an EU spokesman as telling the French government

“We expect France to notify to us of a restructuring plan, not just for the banking arm but for the whole PSA group, because this aid also benefits the whole group,”

Government aid for Banque PSA was first proposed back in October, as it became difficult for the finance unit to borrow money due to the overall weakness of PSA itself. A bailout of Banque PSA was also seen as more palatable than providing aid to the car making unit.

Details of any potential restructuring are unclear, but the EU wants to make sure that PSA’s business will remain viable without any further state aid. Either way, PSA will be under the gun even further, as attempts to cut jobs have already raised the ire of France’s powerful labor unions and the current left-wing government.

Lacking the same profit sources as its French rival Renault (like low cost cars and exposure to healthy markets), PSA has been in the toilet financially, bleeding as much as 200 million euros per month. Even the new 208, France’s best-selling car last month, hasn’t been enough to help stem the tide.

It’s safe to say that 2012 was PSA’s annus horriblus. From job cuts to a shaky alliance with GM to bond rating downgrades, everything that could have gone wrong for Peugeot-Citroen ended up happening. And 2013 may not be much better, as the prospect of a bailout looks ever more like reality.

PSA is still faced with the structural problems that dog pretty much every car maker in Europe; a weak economy, rampant overcapacity and a demographic deck stacked against growth in the new car market. Unlike chief rival Renault, PSA has failed to expand its horizons beyond Europe, with little in the way of low cost offerings for emerging markets. On top of that, attempts by PSA at exercising financial prudence, like cutting jobs and closing factories, have been met with outrage in France. A proposed alliance with General Motors has produced little in the way of any tangible results.

The most recent news concerning PSA stems from comments made by French Prime Minister Jean-Marc Ayrault, who denied that there would be a PSA bailout, but admitted that there was a plan in place should the need arise. Technically, there already has been a bailout; back in October, the French government helped arrange a re-financing deal for Banque PSA, the company’s captive lending arm. Since bailing out PSA itself would have been a political nightmare both at home and among the wider EU, a helping hand for Banque PSA was seen as an expedient way to aid PSA.

PSA seemingly kicked off 2013 with a product offensive; an all-new modular platform is said to underpin PSA’s C and D-segment cars, which account for most of their sales, and a new hybrid platform using compressed air promises the usual world-saving spiel that makes dilettante green car fans and government officials go gaga. But these new product plans raised far more questions than they actually solved.

For starters, the new product plans were peculiar in light of the supposed platform sharing and other synergies that GM and PSA touted as benefits of their allance. But that union appears to be as good as dead. While PSA was hoping to leverage GM’s experience in emerging markets like China, GM was apparently looking to use PSA as a dumping ground for its troubled Opel division.

The original GM-PSA platform sharing plans called for a broad range of tie-ups with city cars and compact MPVs, as well as Opel producing PSA’s D-Segment car. Now, PSA will apparently go it alone with a new modular platform called EMP2, which covers the C and D segments, which covers the mid-size and large car, MPV and crossover segments that comprise most of PSA’s range. A modular platform makes sense for Peugeot financially, but it requires a great deal of capital that PSA doesn’t necessarily have.

Even more pie-in-the-sky is the compressed-air-hybrid project. As outlandish as it may be, there appear to be a number of stumbling blocks that make the whole deal look like little more than vaporware. Bosch, PSA’s partner in the compressed air hybrid scheme, noted that “…Unspecified technical challenges have yet to be overcome before a commercial launch…“, despite PSA’s insistence of a 2016 launch date – a relative blip in time in the auto industry.

The answer appears to be lie in the use of these products as a PR pitch for a forthcoming bailout. Industry observers will recall that GM trotted out vehicles like the Volt and the Malibu as justification for its own bailout. In addition, the compressed air hybrid is far less of a moonshot right now than the Volt was in 2008, and PSA’s partnership with Bosch lends the program a certain gravitas. But as it stands, PSA can’t even gain traction with popular products like the 208 B-Segment hatchback – how can they be expected to introduce this kind of technology on such a short timeline?

However, if PSA were to go hat in hand to the French government, they could point to EMP2 and the new compressed air system as evidence that they are well positioned to be competitive in the future. Hybrid sales are up more than 50 percent in Europe, and green issues are still en vogue with a majority of consumers. French President Francois Hollande employs a hybrid Citroen as his official State Car, and the new compressed air hybrid is an important exercise in government relations if PSA is going to get any state assistance. Meanwhile, the first EMP2 product is the Citroen Picasso (above), one of PSA’s few bright spots, and a consistently strong seller in the European MPV segment. Similar to how the Malibu and the Volt represented the here and now and the future for GM, these two will be the emblems of PSA’s immediate recovery and its climb back to relevance in the future. Prototypes of the Picasso have been seen out and about near PSA’s Spanish assembly plants, but the compressed air hybrid isn’t nearly as far along. Rest assured, if it does make it to production, it won’t suffer from anywhere near the same vitriol as the Volt did.

The French government is denying that it plans to acquire a stake in PSA, but France’s Prime Minister told reporters that mechanisms for providing government assistance have already been vetted.

At a time of high unemployment and factory closures across France, the fate of PSA is a sensitive one. PSA’s sales have been tanking, hampered by an uncompetitive product line, falling car sales in Europe and a lack of low-cost product to compete in emerging markets.

Peugeot has already cut 8,00 jobs in the country as part of its plan to break even by 2014. But the company’s losses, estimated at 200 million euros a month. Amid an announcement of a $5.53 billion writedown, French politicians began going on the offensive regarding PSA, with the country’s budget minister declaring that ”Let’s be clear: this company cannot, must not disappear”.

French PM Jean-Marc Ayrault told Reuters that a more detailed plan had already been drawn up, while simultaneously denying that any action would be taken at this point

“We do have a tool, the FSI (France’s sovereign-wealth fund), which can if necessary take a stake. But today this question is not being looked at,”

Ironically, Peugeot, unlike its rival Renault, is entirely owned by private actors, while the French government owns a 15 percent stake in Renault. But that could change quickly given the way things are progressing.

We at TTAC are very excited by modular platforms, and it has nothing to do with undiagnosed autism spectrum disorders or a lack of interest in the wider world outside autos. Modular platforms are the next great leap forward for auto makers; green cars help save cute animals, and thus get all the attention, but guess what underpins the Nissan Leaf? A version of Renault-Nissan’s B Platform, which underpins everything from the Cube to the Clio to the Sandero.

The driving force behind modular platforms is scale. Auto makers are competing in a global marketplace selling an extremely complex commodity product with high R&D costs and low profit margins. Modular platforms help by creating a standard platform and component kit across a number of model lines, making the car less complex to manufacture and allowing for the platform itself to be amortized across a number of model lines.

One could argue that BMW was one of the pioneers of modular platforms, building the 3, 5 and 7-Series in the familiar “one sausage, many lengths” format that we all know and love (or loathe, depending on how much you emotionally invest yourself in the brand). Recently, Volkswagen has taken modularity to  another level with their MQB platform. Different components can be added or removed depending on the vehicle’s footprint or engine size, but the distance between the front axle and the pedal box remains fixed. This allows VW an unprecedented amount of flexibility to build pretty much every transverse, front-wheel drive vehicle off of one platform, at any of its global factories that is configured to built MQB-based cars. The advantages as far as scale goes are unprecedented.

PSA, the struggling French automaker behind Peugeot and Citroen, has just released their own version of a modular platform, dubbed EMP2, as a means of capitalizing on that trend. From a product standpoint,  EMP2 will cover the C and D segment cars in the PSA range, which are fairly large for Europe, but account for about half of PSA’s sales.Crucially, EMP2 will not be applicable to B segment cars, while VW’s MQB platform will, a major oversight given that PSA relies on markets like Europe, Africa and South America, where B segment cars are most important.

Instead, EMP2 will be the building blocks for vehicles like the Citroen C5 mid-size sedan, the DS4 and DS5 premium hatchbacks and the Peugeot 308 and 508, which compete in the C and D segment respectively. EMP2 will also be used to build station wagons, SUVs (which PSA currently sources from other OEMs) MPV-type vehicles (minivan type cars that are smaller than North American minivans, a popular segment in Europe that PSA has traditionally been an innovation leader) such as the next generation Citroen C4 Picasso and the all-important light commercial vehicle segment.

PSA is touting weight savings of 154 lbs versus outgoing models, with a 22 percent reduction in CO2 emissions thanks to technologies like start-stop systems, electric power steering, lightweight construction materials and low rolling resistance tires. Other advanced features like electronic parking brakes, active aerodynamics and radar-guided cruise control were also touted in a short video released by PSA.

From a manufacturing standpoint, PSA appears to have emulated a number of VW’s innovations with EMP2, while making some interesting advancements. Much like MQB, EMP2 relies on a series of “plug and play” modules, with some interesting differentiations. For example, EMP2 offers two rear suspension options; a beam axle or a multilink independent system can be optioned, depending on whether PSA wants to keep costs down or to provide a superior driving experience. A high or low driving position and a short or long rear section can be substituted, allowing for an easy transition between a passenger car or something like an MPV or commercial vehicle that requires more cargo room and a higher seating position.

Where EMP2 appears to fall flat is in the front section – while MQB offers an exceptional degree of customization up front (with only the one fixed point) it appears that PSA has kept the front section fixed, with various powertrains able to be installed. Given the size and profitability delta between PSA and VW, it’s understandable that PSA would opt for a simpler, less expensive solution, though the importance of scale and flexibility suggests that VW will continue to have the upper hand with MQB. It’s likely that the fixed front section is one of the key stumbling blocks preventing EMP2 from being used as a B-segment platform, since the single fixed point of MQB allows for different wheelbases as well, something EMP2 is not capable of.

From a manufacturing standpoint, PSA has also given up much of the flexibility that Volkswagen enjoys with MQB, in exchange for what is ostensibly a cheaper and less complex architecture. PSA simply does not have the R&D budget and global scale to embark on something as ambitious as MQB, and therefore must make tradeoffs in certain areas. On the other hand, PSA doesn’t require such an overarching modular architecture like VW does, and can tailor its factories to produce popular models that align closely with local tastes (such as high-end crossovers and larger sedans in China, MPVs and C-Segment cars in Europe), whereas Volkswagen must manage multiple brands and product lines across a greater number of markets.

The first EMP2 products will be the Citroen Picasso MPV and the new C-segment Peugeot 308 – which will compete against the MQB-based Golf, as well as its Skoda and SEAT siblings. Worth noting is that both VW and PSA are debuting these products at a time when the mainstream car market is eroding in Europe. The real threat may come from the low-cost entries, specifically Renault’s Dacia line, which offers B and C segment sedans and hatchbacks, as well as compact SUVs and MPVs, at cut-rate prices, with little appreciable difference in quality. While high-content features like start-stop and radar-guided cruise control may be absent, the basic features that many motorists require, like air-conditioning and central locking are still available. And given Europe’s precarious economic state, the price – frequently under 10,000 euro – is right. Meanwhile, Renault, taking advantage of their own modular platform system, is making as much as 9 percent profit on the cars, margins that PSA can only dream of.

Also worth noting is how EMP2 would integrate with any potential GM tie-up. This past summer, plans for a joint Opel/PSA tie-up in the D segment space were discussed, with Opel tapped to build the successor to Citroen’s D-segment entry, the C5. Half a year later, Peugeot is debuting a vision that runs counter to the Opel plan, one which would provide significant cost-savings for both auto makers, despite the seemingly moribund alliance. Clarification from both parties will be required to get a picture of PSA’s future product plans, as well as the strength of the GM-PSA alliance. In addition, this may be a signal regarding PSA’s own lack of faith in Opel, which is in the throes of a near-meltdown financially.

We did not believe that EU regulators would let France’s government bailout of GM’s alliance partner PSA skate through unchallenged. State aid to companies is against EU rules, and refinancing of Banque PSA Finance is state aid EU Competition Commissioner Joaquin Almunia wrote in a letter to the French government. This according to a report in the French daily Les Echos.

The clever French thought that by propping up PSA’s bank instead of PSA directly, the aid would be legal. EU governments may help banks, but not other companies. The EU competition commissioner does not quite buy this argument.

The EU stumbled over the hard to miss fact that the aid comes with strong strings attached: Reduced job cuts, French plants stay open, government and worker representatives get a seat on the board of PSA. A bank does not commit to car plants remaining in the country.

“The EU objections follow a formal complaint received by Brussels from an unidentified Peugeot competitor,” says Reuters.  The German state of Lower Saxony said it would report the deal to Brussels as a possible breach of EU rules. Lower Saxony is a shareholder of Volkswagen, which is headquartered in the state.

France is a repeat offender. In 2010, Almunia objected to a government loan to Renault, There was a clause in the agreement that required that within two years, Renault has to buy 70 percent of the parts from French suppliers. In 2009, the French government tried to link loans for PSA and Renault with keeping jobs in France. Brussels showed the yellow card, and Nicolas Sarkozy watered the clause down to a “moral obligation.”

However, using Brussels as the bogeyman is part of the Europe political theater. Act 1: Government comes to the rescue to save jobs. Act 2: Brussels objects. Act 3: Government says: “We tried.” Act 4: Government saves face and money.

The fate of PSA and the Algerian people has been intertwined for decades. The group’s Aulnay plant, which is due to close, was originally staffed by immigrants from North Africa, lured by the promise of a better life and secure jobs in France. And while Peugeot sales withered in France, the brand has been traditionally strong in North Africa, with 2011 bringing a 93 percent increase in sales for Peugeot.

But Algeria’s push for a domestic car industry doesn’t seem to include PSA. Arch-rival Renault is due to set up a factory in the country, but PSA has apparently rejected overtures from the French government to take a stake in the ailing car maker.

French President Francois Hollande is due to visit Algeria this week, and is eager to discuss the possibility of Algeria investing in PSA. But according to French paper La Tribune, Algeria wants no part of it.

Instead, they want to emulate the situation in Morocco, and that means a domestic car manufacturing industry in partnership with Renault. La Tribune reports that a deal with Renault will be signed any day now, and Algeria even decided to forgo a plant with Volkswagen so the Renault deal could go forward. Under the terms of the Renault agreement, the Algerian government will hold a 51 percent stake in the plant, which will produce the Renault Symbol – a rebadged Dacia Logan.

Despite the rebuff, PSA is still strong in Algeria, with Peugeot ranking as the #2 brand behind Renault. But that won’t do much to aleviate PSA’s troubles in its home market. The birth of a domestic auto manufacturing industry in the former colonies, right alongside the slow death of France’s own industry only makes things worse.

Peugeot is deepening job cuts at its French factories, with another 1,500 positions set to be made redundant as part of a massive cost-cutting effort. Meanwhile, rival automaker Renault is expanding its operations in Morocco as its Dacia brand continues to steamroll through the European market.

While Peugeot had previously announced that 8,000 jobs were set to go on the chopping block, another 1,500 jobs will be eliminated via attrition. Meanwhile, Dacia’s Moroccan facility is looking to double its capacity next year to 350,000 units, and will expand the plant’s export base. Currently, Europe eats up almost all of the Lodgy minivans and Dokker commercial vans produced by the plant, but markets like Turkey and the Middle East are set to be thrown into the mix.

PSA’s job cuts have been extremely controversial in France, and are rife with geopolitical implications. Legions of North African immigrants from former French colonies came to France to work in PSA plants. Now, their jobs are being shipped back to the continent, with Renault planning to hire 3,000 workers to staff the Moroccan Dacia plant.

Peugeot will eliminate an additional 1,500 French jobs by 2014, bringing the previously announced 8,000 layoffs close to 10,000, PSA managers told union representatives yesterday.

The job reductions will be trough attrition. Workers who are leaving the company or retiring will not be replaced, Reuters reports.

Along with Fiat and Opel, PSA Peugeot Citroen is considered most affected by the European slump in car sales and overabundance of production capacity.

Next up in the “we couldn’t make this shit up” category – PSA and Citroen were hit by strikes after workers were called out for being unproductive.

Reuters managed to report the details with a straight face

A single production line at Peugeot’s Aulnay plant on the outskirts of Paris, slated to be closed in 2014 at the cost of 3,000 jobs, ground to a halt after five workers were summoned for lack of productivity, a representative of the CGT union said in a phone interview.

The story of the Aulnay plant and its social implications for France is one of the more fascinating intersections between politics and automobiles. Meanwhile, Renault had two factories hit by job actions after it asked workers to agree to a series of moves that would bring French production costs in line with those in Spain.

General Motors and PSA have put the brakes on talks regarding a broader alliance after PSA accepted financial assistance from the French government to help its ailing financial situation.

Reuters reports that

“Two sources with direct knowledge of those discussions said they were broken off after Peugeot accepted a state guarantee for its lending arm last month and announced a further deterioration of its cash position.

The automakers have agreed to a “pause” in early-stage talks on a Peugeot-Opel deal, said one of the sources. The government bailout is “sabotaging the plan”, he added.”

One of the key sticking points is a stipulation by the French government that mandates no domestic job cuts for PSA. Job losses that came exclusively from GM’s Opel division would be politically unacceptable in Germany, leading to a stalemate in terms of a deeper alliance that would see jobs cut and plants closed as a consequence of sharing technology and production capacity.

The government funds may have also caused PSA to change its tune on the alliance with Opel. Remarks made by the French Industry Minister included suggestions that Peugeot “measure…the consequences for our country” when it came to shacking up with an auto maker, and called on PSA to preserve French jobs and assembly plants.

PSA is looking to challenge Renault-Nissan’s dominance of the low cost car segment with a new sedan branded as a Peugeot.

The 301, shown above, will debut first in Turkey, with introductions following in Eastern Europe, South America and Africa. Based on the new 208 hatchback, the 301 was designed as a sedan due to the preference for roomy trunks in emerging markets (as as any Brazilian can surely confirm).

According to Bloomberg, the 301 is intended as a step up from the Dacia range, which are typically no-frills offerings devoid of most creature comforts. On the surface, it may seem that Peugeot is attempting a more premium low-cost car (as oxymoronic as that may sound) but that’s only part of the story. PSA not only lacks another nameplate like Dacia, but also the factories in countries like Romania and Morocco where labor costs are at rock bottom. The 301 is built in Spain, where hourly wages are five times that of Romania.

On the other hand, while Renault engineered the Dacia cars from a clean sheet of paper, the 301′s roots are in a much higher caliber of car, as the 208 is intended to help revive Peugeot’s fortunes in mature markets. While the 301 lacks the 208′s high end features like a touch screen and a start-stop system, it does have Bluetooth and advanced safety technologies not available on Dacia models.

Unfortunately for Peugeot, the road to conquering emerging markets is often fraught with obstacles, as one analyst told Bloomberg

“The market for these kinds of cars is the toughest…Peugeot’s trying to internationalize their business. The problem is that they’re always late to the party, with often the wrong product.”

Read more: http://www.autonews.com/article/20121109/ANE/311099969#ixzz2C4ZOP7Er

Are you talkin’ to me???

There was the Cadillac of minivans. A different kind of company selling a different kind of car. A Swede with no compromises, and a Frenchman that went from strength to strength.

Daihatsus that were perhaps, a bit too modest, by skinny dipping their unknown name in a slogan-less lake. And then we had that crazy distant Yugoslavian cousin who bragged about a ‘road back to sanity’ while his neighbors blew up his plant.

They are gone now from these shores, for now. As is Opel, Hummer, Mercury, Plymouth, and in due time, Suzuki. An amazing variety of brands that offered their own interesting contributions to the mosaic of the American automotive experience.

Rockys and Rodeos were rugged for too short of a while. While Hummer alternated between playing the role of the military bad-ass and the fashionista poseur. Eventually style won, followed by bankruptcy.

Europeans always offered a more sophisticated level of style while battling Gremlins on every level. While weaker Japanese marques, plainly, contributed varying levels of utility and engineering excellence to a marketplace that expected far more.

Then there is Oldsmobile.

Oldsmobile, the rocket division, was the power and the glory.  From their 300+ horsepower cruisers of the late-60′s to the best selling Cutlass Supremes of the mid-80′s. It’s hard to find fault with a popular brand like Oldsmobile that was torturously mis-marketed and blandified into irrelevance.

All defunct brands have their unique qualities. But which vintage offered the very best? Which model among them all provided that level of power and prestige that begs for a resurrection of the brand?

Any constraints on choices? Well… no outright luxury or exotic brands. Vectors, Deusenbergs, Cords and Tuckers may have their place in museuems the world over. But for this particular exercise I want special attention to be given to those models that served the everyday Joe.

Choose your car wisely, and defend it well.  Hell hath no Fury like a Plymouth.

Fans of HBO’s hit show The Wire will remember The New Day Co-Op, a coalition of Baltimore heroin dealers who band together in part to get better deals on their drug supply and remain strong against law enforcement and rival gangsters. Half a world a way, a similar proposal was floated by Fiat CEO Sergio Marchionne, but never came to pass.

A report by Bloomberg outlined Marchionne’s vision to take on Volkswagen. It involved PSA, Opel and lots of money.

Marchionne proposed that Peugeot commit to a combination between Fiat, the French carmaker and GM’s German Opel unit in exchange for stock in the new entity, said the people, who asked not to be named as the proposal was private. The CEO also offered to take Opel as part of the deal if he got $5 billion to $7 billion to restructure the unit, two of the people said.

A combination would have given the new entity more heft to compete with Volkswagen as the industry weathers the sovereign- debt crisis. Together, Fiat, Peugeot and Opel account for 25 percent of the region’s auto sales, topping VW’s 24.8 percent share.

The big reason for PSA’s hesitancy was the lack of technology brought to the table by Fiat, saddled with more exposure to countries like Spain and Italy. Apparently, partnering with GM is preferable. Who knew?

“When you do everything right but too late, you do it all wrong. Before reaching a dead end, PSA decided to forge a partnership with a manufacturer [General Motors] that I don’t consider to be among the industry’s leaders of the pack. Overall, I think there is a lack of ambition [when it comes to product] from the French manufacturers.”

-Thierry Morin, former CEO of Valeo

Given how much love there is in certain sections of TTAC for PSA products – the Citroen C6, for example – this quote seems like a dagger in the heart for some readers. I profess a profound affection for the C6, the DS range and even newer Peugeots like the 208 and 508. Renault’s lineup, particularly the Renaultsport cars, are undeniably enticing and I one day hope to be the world’s preeminent scholar of Dacia’s impact on the auto industry.

Viewed through a North American lens (i.e. the grass is greener on the Continent), I can’t say I find French cars to lack ambition. On the contrary, I find their styling and packing quite bold and innovative. I dare anyone not to look at the C6 above and be dumbstruck by its elegance. But there’s the undeniable fact that French cars are non-entities in virtually every market save for France and Iran (where Peugeot is a big player).

Morin cites the lack of powerful engines as a reason for the decline of French cars and their inability to maintain a premium position, but French cars have never been about big power. The Renaultsport lineup is consistently praised by the enthusiast press, and is popular enough that when Renault’s lineup was all but eliminated in the UK to make way for Dacia, the Renaultsport cars were spared the executioner’s axe due to their strong sales.

And then, Morin hits on what may be the ultimate reason behind the decline of French cars relative to the competition

Year after year, the gap widens between German and French car manufacturers. Germans, just like the Japanese, always deliver better cars to market. They are really passionate about cars and they are focused on improving everything about their cars from one generation to the next. When you get in an Audi A1, it is exceptionally refined for such a small car and it echoes the premium-ness of the bigger A6 or A8. While German CEOs are real ‘car guys,’ in France, many people thought that being a wise and talented executive was enough to be successful in the automotive business. It proved wrong sometimes. This lack of obsession is the main difference between France and Germany. I think that being too disconnected from the product is a problem.

Stop me if you’ve heard that before.