The economic consequences of the Covid-19 pandemic are already being felt. Despite the dismal scenario already reported by several manufacturers and car groups, fortunately there have been exceptions. THE PSA Group is one of them, having registered profits in the very complicated first half of 2020.
Even so, there is no reason for overblown celebrations. Despite the group's resilience, virtually all indicators suffered considerable declines, reflecting the impact of measures that confined almost the entire continent to combat Coronavirus.
Groupe PSA, made up of the car brands Peugeot, Citroën, Opel/Vauxhall, DS Automobiles, saw its sales drop by 45% in the first half of 2020: 1 033 000 vehicles against 1 903 000 vehicles in the same period of 2019.
Despite the strong break, the French group recorded a profit of 595 million euros , good news. However, compare with the same period in 2019, when it recorded 1.83 billion euros… The operating margin was also heavily impacted: from 8.7% in the first half of 2019 to 2.1% in the first half of 2020.
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The positive results of Groupe PSA when compared to the negative results of rival groups reflect all the efforts made in recent years by Carlos Tavares, its CEO, to reduce the costs of the entire group. As he says:
Carlos Tavares, Chairman of the Board of Directors of Groupe PSA“This half-year result demonstrates the Group's resilience, rewarding six consecutive years of hard work to increase our agility and reduce our 'break-even' (neutral). (…) We are determined to achieve a solid recovery in the second half of the year, as we complete the process of creating Stellantis by the end of the first quarter of 2021.”
Forecasts
For the second half, Groupe PSA's forecasts do not differ from those we have seen by several analysts. It is expected that the European market — the most important for the group — will fall 25% by the end of the year. In Russia and Latin America, this drop should be higher by 30%, while in China, the world's largest automobile market, this drop is more modest, 10%.
The second semester will be one of recovery. The group led by Carlos Tavares set as a goal for the period 2019/2021 an average current operating margin above 4.5% for the Automobile division.
It also leaves good prospects for Stellantis, the new automotive group that will result from the merger of PSA and FCA. It will also be led by Carlos Tavares and, according to him, the merger should be completed by the end of the first quarter of 2021.