Citroen is counting on a warm reception for its new C4-based C-Triomphe model developed specially for China to hit its 2006 sales target of 20%-plus growth in the country, despite a cooling market.
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Car makers face a more difficult environment in the second half as annual growth in China’s auto market slows to around 20% from 40% in the first six months, Gilles Debonnet, who heads Citroen in China, told Reuters.
It is nonetheless confident of selling 120,000-130,000 cars in China this year, up from 103,000 in 2005, given demand for the C-Triomphe, a four-door sedan that went on sale in June, the report added. By the end of July, sales of the locally-made model had topped 8,000.
“In China, you never know because the market changes very fast, and it seems that the second part of the year will be more difficult than the first part,” Debonnet told Reuters. “But, for us, normally we should sell a bit more in the second part of the year.”
Citroen, produced on the same assembly lines as Peugeot cars at a 190 hectare site in Wuhan sold 60,000 cars in the first six months of this year, the report said.
That helped Dongfeng Peugeot Citroen Automobile, PSA’s 14-year-old China joint venture, rack up a 37.8% jump in unit sales and a near 40% increase in revenue to 8.89bn yuan ($1.1bn) in January-June.
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By GlobalDataCitroen had about 3% of the Chinese market in the first half. Peugeot’s share was about 2%, Reuters noted.
Debonnet reportedly declined to comment on the profit outlook for the joint venture, which crept back into the black in the second half of 2005 following 18 months of losses.
It turned in an operating profit of 490m yuan in the first half, reversing a loss of 762m yuan in the same period last year. January-June net profit was 191m yuan against a year-earlier loss of 636m yuan.
To increase market share, Citroen plans to broaden its product range and reach deeper into China, where urban incomes rose more than 10% in real terms in the first six months, Reuters said.
The joint venture aims to expand capacity in Wuhan to 300,000 cars a year in 2008 and has announced plans for a second factory in the city to produce 150,000 units from 2009.
A compact town car will be launched in November, becoming the sixth Citroen model produced in China.
Citroen will also expand its dealerships to around 500 from 350 now over the coming five years, Debonnet told Reuters.
Around 80% of Citroen’s new outlets would be in third-tier cities with populations of between 300,000 and 1m, and average household incomes of 20,000 yuan a year.
“We are starting now to increase our network in cities in which practically no market exists today,” he told the news agency.
China’s fast-spreading wealth was already evident in second-tier cities like Wuhan where a preference for locally made cars had boosted Citroen’s market share, Debonnet said.
“Every day in cities like these, people are able to go out and buy new cars,” he told Reuters. “Just look at the traffic jams: they weren’t here five years ago.”
