You could search in vain to find a Citroën car at the headquarters of PSA Peugeot Citroën on Avenue de la Grande Armée in Paris. Behind the huge glass windows is a display of polished bonnets, all the latest Peugeot models, but the other brand is nowhere to be seen. The Citroën showroom is far down the road on the Champs Élysées and the branding apartheid at PSA’s HQ is a small clue to the huge design and marketing problem that Christian Streiff, the new chairman of the French group, needs to address.

These brands used to be as different as chalk and cheese - older car aficionados will remember the Citroën DS, the extraordinary, low-slung, space-age limo that rose off the ground on strange hydraulics and conveyed President Charles de Gaulle to his appointments. Citroën was also the 2CV peasantmobile, while Peugeot was the workaday 404, a tank on wheels for M et Mme Dupont and the kids.

PSA is in recovery after a collapse in its profit margin and loss of market share in Europe. Yesterday Mr Streiff was setting out his wishlist – a set of targets stretching out to 2010 and ambitions for 2015.

Some bits are easy enough to understand: cutting fixed costs by 30 per cent; savings in procurement and logistics. These are tough but achievable targets that will achieve three quarters of a projected increase in the operating margin from 2 per cent to 5-6 per cent by 2010.

More difficult will be the volume targets – four million vehicles by 2010. Being more efficient is about grit and hard-nosed determination, but selling more cars to bored consumers is about flair and imagination and Mr Streiff has set himself an almost impossible task. He wants to recapture the soul of the old brands, which he says are “genetically different”, while at the same time making the cars more cheaply, seeking greater efficiencies by using the same manufacturing platforms for both brands. Most people don’t know that the guts of a Citroën is indistinguishable from a Peugeot – it’s just the bodywork, the styling, the trim and the advertising that justify the existence of separate names.

PSA has tried to make two brands an advantage – targeting different audiences with different styles and prices. The trouble is that the global car market is polarising between the very cheap and the more expensive.

PSA’s brands are being stretched like rubber bands and Mr Streiff is responding with plans for 29 product launches, including restyling, renewals and five concept launches. What PSA won’t do is promote one brand to premium and relegate the other.

Instead, both brands will move gradually upmarket. Unlike its compatriot Renault, which has just announced a €1 billion (£677 million) investment in Morocco to produce its Logan model, PSA has given up the challenge of trying to make a dirt-cheap car and instead is launching £30,000 executive toys such as the Citroën C6. In essence, Mr Streiff is trying to reinvent two car brands at the same time. Just one would be difficult enough.

While France was merging two giants of the downstream energy sector, Suez and Gaz de France, things were getting worse for Europe upstream. Repsol, the Spanish oil and gas producer, was ejected from Algeria. A tide of oil nationalism has swept in protectionist legislation requiring Algerian control of energy assets.

It is another blow for Repsol, which was forced into severe writedowns on its oil and gas reserves after Bolivian nationalisations. It is a moot point where an upstream group such as Repsol can make its mark these days when so many doors are closing. For Europeans, most of the Middle East is closed for business and Russia is grumpy.

If upstream energy plays are increasingly difficult, President Sarkozy has decided to play a different game. With controlling stakes in EdF and GdF-Suez, the French State has its grip on a huge share of the European gas and power market, a share that is likely to expand rather than contract. Soon, a third company will be added to create a Sarkozy energy trinity.

France’s atomic energy authority, which owns 80 per cent of Areva, the nuclear power engineer, is considering several restructuring plans that would put Areva on a sounder financial footing. One of those plans would merge Areva with Alstom, the turbine manufacturer. The French nuclear group is also developing close links with Mitsubishi Heavy Industries, with which Areva plans to develop a new 1,100-megawatt reactor design.

This is more than industrial policy; it is a strategic bulwark against the challenge from nationalist oil and gas producers. It is state capitalism and the people at Gazprom will recognise it well.

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