PSA To Open Development Center in Morocco To Cut Costs
|   Saturday, November 22, 2014
PSA Peugeot Citroen will open a development center in Morocco with the consulting firm Altran, headlines Reuters. The decision is the first major change to reduce costs taken by Carlos Tavares, the new head of the French group, after deciding to gradually reduce the portfolio of Peugeot and Citroen models in order to eliminate unprofitable products.

The new Altran center will have 1,500 posts and will be responsible for the research and development required for new Peugeot and Citroen models.
The French will reduce development costs with this measure, known as outsourcing, but will not fully develop new models in the new center in Morocco.

For Peugeot, the Moroccan research and development move is an important step taken as it seeks to regain competitiveness. It's also a symbolic win for the North African kingdom that reflects its growing industrial sophistication in sectors such as cars and aerospace.

The Casablanca site will specialize in computer-aided design, modeling future PSA products and technical documentation. Somehow, the initiative taken by Carlos Tavares, the former Renault number two, is similar to that taken by his former employer when it opened a plant in Tangier, Morocco, to reduce costs. Unlike PSA Peugeot Citroen, the Renault Group only produces automobile Morocco, while development is carried out in other centers, including in Romania, known as Renault Technologie Roumanie.

In contrast, the PSA Peugeot Citroen plant in Morocco is unwilling to make cars, or so says the brand spokesman, who declined to comment on the agreement announced by those from Reuters. Representatives of the consulting company Altran in Paris said that there is no contract with Peugeot, refusing to answer questions on potential businesses discovered by Reuters, using sources which preferred to remain confidential within the French conglomerate.

Reuters believes that the French from PSA Peugeot-Citroen are afraid of their union and the government in Paris because of their decision to reduce the workforce in France, so a contract with a consulting company that would bring cost reductions would be an important step towards a return to profit although it will be unpopular on the indigenous manufacturer market. PSA Peugeot Citroen suffers from a decreasing car market in Europe over the last six years and their main disadvantage relative to other competitors was their dependency on one market, instead of diversifying regions on which it activates.

"We can't sell cars in Turkey or North Africa that have been made in France or the euro zone," said in February Chief Financial Officer Jean-Baptiste de Chatillon, adding that the bailout they received then would help "build capacity to serve regions such as the periphery of Europe".

2016 is the year in which PSA Peugeot Citroen hopes to reach profit after years of losses caused by weak sales and uncompetitive models.
Carlos Tavares was praised for his achievements in reducing costs during his career at Renault.

Meanwhile, a new low-cost production investment "is not one of the levers in our recovery plan," Tavares said for Reuters last month, refusing to elaborate. "We don't need it to meet our targets."
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