Christian Streiff, the chairman of Peugeot Citroën, set the French auto-motive group stiff challenges yesterday to raise profit margins, boost sales and lift the company’s two car brands into the premium sector.

In an attempt to restore the company’s weakened position on its home turf, Mr Streiff has set the company the challenge of becoming “the most competitive carmarker in Europe by 2015”.

A cost-cutting programme, which already haS shed up to 8,000 staff in Europe, will continue, raising the operating margin from 2 per cent last year to 5.5 per cent in 2010 and between 6 and 7 per cent by 2015.

The Peugeot Citroën chief has restored the group’s target of achieving four million sales by 2010 and he insisted that this time “we will achieve it”. Most of the sales gain will come from emerging markets, where Mr Streiff has set himself the ambition of one million sales by 2015. Plants built with its partner Dongfeng Motor and 12 new models are expected to bring Peugeot’s Chinese expansion into line with the local market.

Mr Streiff admitted that the company’s objectives in Europe are more modest, reflecting the tough environment that has shredded its market share. A marketing and product campaign will by 2010 add 300,000 units to last year’s 2.9 million European sales.

In an admission that the company has an image problem, Mr Streiff said that there would be an effort to further distinguish the Peugeot and Citroën brands and move them both upmarket while maintaining the common manufacturing platforms that generate cost savings. “What the customers don’t see, we will make common; what the customers can see, hear and touch, we will make distinctive,” he said.

Mr Streiff said that the two brands were fundamentally different in their heritage: “Citroën surprises you - it is avant-garde, fun – while Peugeot reassures you. It is robust. Our job is to translate those values.”

He admitted that “there was a lot of work to do” in restoring the brands to their past glory. Mr Streiff said that between 7,000 and 8,000 jobs had been shed in the cost-cutting programme, mainly through early retirement and voluntary departures. Peugeot Citroën employs about 211,000 people worldwide, including 68,000 in Europe.

The company will cut manufacturing and fixed costs by 30 per cent and supply chain costs by 10 per cent and purchasing costs by between 4 per cent and 6 per cent a year to achieve the margin gains.

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