PSA Peugeot-Citroën’s joint venture with Mitsubishi Motors in Russia – PCMA Rus – has said it will idle production at its plant in Kaluga because of poor sales in the country. The decision follows similar moves by VW announced last week.
It also follows last year’s decision by PSA to cancel rail shipments of parts and knockdown kits from France and Europe to the Kaluga facility, which Gefco handled. That decision was made because the drop in output had made the process “economically unbearable” according to PSA.
In 2014, PSA, which has a 70% stake in the joint venture, registered sales of 41,200 vehicles in Russia.
A spokesperson for the French carmaker confirmed that production of the Peugeot 408 and the Citroën C4 Sedan would be halted between April 27th and July 10th this year. The production line for the Mitsubishi Outlander and Pajero Sport SUVs will be stopped from April 27th until May 12th. However, the company said it remained committed to production in Kaluga.
Furthermore, PCMA Rus said it is making it a priority to increase the localization of parts fed to the Kaluga plant to 50% from the 35% it is currently, something the company stated would help increase the plants profitability and reduce its reliance on foreign exchange fluctuations. It said that this would also help with making the vehicles more affordable for Russian customers and has already reduced the sale price of the Peugeot 408 and the Citroën C4 Sedan.
Customers have also been offered special consumer lending conditions if they choose Peugeot or Citroën vehicles produced in Russia.
“The main efforts of PSA Peugeot Citroën’s commercial office are [to minimise] the impact from the current market situation on our potential customers,” said the company in a statement.
Full scale production at the €550m ($595m) plant began in 2012 with the Peugeot 408 and it has a total production capacity of 125,000. However, the car market in Russia has dropped 35% this year.
Reorganisation at the top at Peugeot Citroën Rus
In other news, PSA Peugeot Citroën’s commercial subsidiary in Russia, Peugeot Citroën Rus has reorganised the roles of its three brand directors in the country.
Peugeot, Citroën and DS, have been merged and Frederic Vuarin, Peugeot Russia director has been appointed head of all three. He will supervise all sales departments, as well as other functions merged in the new structure, which include common departments for marketing, network development and logistics. These teams will also report to Vuarin.
Christophe Bergerand will stay on as the company’s CEO, combining his duties with those as member of PSA Peugeot Citroën Executive Committee, general director in Russia and the CIS (Eurasia region), and president of the board for PCMA Rus.
It means Citroën and DS Russia director, Jean-Louis Chamla, will leave Russia due to contract termination.