Four PSA Peugeot-Citroën production sites are said to be competing to manufacture a gasoline (petrol) engine based on previous-generation technology, reports Les Echos. Sources have told the newspaper that its Douvrin and Tremery engine plants in France, and vehicle production facilities in Vigo (Spain) and Trnava (Slovakia) are bidding to build the 200,000 units per annum (upa) of this engine for B- and C-segment models. It said that Tremery was keen to gain the business due to an expected contraction in diesel engine demand, although sources said that it was unlikely to be picked over Douvrin, which already manufactures gasoline engines. The report added that while Vigo and Trnava could offer lower labour costs, improved logistic flows and public support, there is little expertise in engine manufacture at the sites. It would also require considerable investment and an increase in headcount.
Significance: Although PSA conducts some engine production in China with its joint-venture (JV) partners and manufactures engines in Brazil and Argentina, it focuses all of its engine production in Europe on the two French locations noted above. However, Tremery's heavy focus on diesel could be put under pressure from the growing backlash against the technology, particularly in PSA's domestic market. Although some of the sources that the newspaper has spoken to have suggested that bringing in the two non-French sites is being used as a political lever by PSA's management, there is certainly a strong argument for locating some production outside France. Indeed, Vigo and Trnava are both large vehicle manufacturing sites and also have a lower cost base. Indeed, its rival Renault also has production bases in Spain and Romania.
