PSA mirrors VW, readies megaplatform to cut costs

PSA/Peugeot-Citroen is planning to produce its compact, mid-sized and SUV models on a common platform that also is likely to underpin models made by alliance partner General Motors.

The struggling French automaker is looking to borrow from Volkswagen’s money-saving megaplatform strategy as a way to stem massive financial losses that have forced staff cuts and a planned factory closure in France.

PSA says that by 2014 it will produce about half of its cars using the Efficient Modular Platform 2. The company declined to give an more specific number of cars that will use the platform.

Previously, PSA used three different platforms to make its compact, mid-sized and SUV models.

The first models to use the EMP2 will be the Citroen C4 Picasso and Peugeot 308, which are scheduled to launch later this year.

PSA says EMP2 will help the company reduce r&d and production costs because the automaker and its suppliers will develop and produce the same components for a wide range of sedans, hatchbacks, wagons, crossovers, cabriolets and coupes.

“PSA, as well as all other manufacturers in Europe, are tightly reigned in by their finances, especially with regard to more stringent safety and emissions regulations,” Ian Fletcher, an analyst for IHS Automotive, told Automotive News Europe. “It thus makes a lot more sense to spread your engineering capabilities more effectively with a shared architecture.”

A PSA spokesman told Automotive News Europe that it was “very likely” that a number of models from GM subsidiaries Opel and Vauxhall would be based on the platform as part of the 1-year-old alliance agreement between the two automakers. The spokesman would not comment on which Opel/Vauxhall models might use the platform, while Fletcher said he expected EMP2 to underpin Opel’s upcoming Zafira compact minivan. PSA declined to say how much it spent to develop EMP2 or how much it expects to save from using the platform. VW’s largest megaplatform, known internally as MQB, cost nearly $70 billion to create, estimates Morgan Stanley. The reward for this investment is big. The projected annual gross savings by 2019 is $19 billion, according to the bank, with gross margins approaching 10 percent.

“VW is the one that is held up as the model for this sort of modular approach,” Fletcher said. “There are so many different vehicles spun off of the Golf architecture alone, it is almost setting new precedents really.”

By 2019, Morgan Stanley analysts expect VW to use MQB to underpin 4.6 million vehicles ranging from the new Golf to the next Polo subcompact to the future-generation Passat.

PSA says that other benefits of EMP2 include a per-car weight reduction of 70kg, which will help reduce average fuel consumption in future Peugeots and Citroens by 22 percent, depending on the model. By using less fuel, EMP2 models also will emit fewer emissions, but the company declined to give any exact figures. The EMP2 platform includes the underbody, suspension system, powertrain as well as the electric and electronic systems.

PSA will use the new platform at its assembly plants in Sochaux, Rennes, and Mulhouse, France; Vigo, Spain; Wuhan and Shenzhen China; Buenos Aires, Argentina; and Kaluga, Russia.

Other automakers working to expand the number of models that share a modular platform include Renault-Nissan, Fiat and Ford. The overall goal is to find a way to balance the potential savings with the risks, such as the threat of a global recall if a single part used in millions of cars fails.

Reuters contributed to this story