Carmaker PSA in reverse as Chinese sales hit a wall

With sales slumping in China and a handful of other markets, Europe now accounts for nearly 9 out of 10 vehicles sold by French carmaker PSA (AFP Photo/SEBASTIEN BOZON)

French carmaker PSA said Monday its sales slumped in the first half of the year as it pulled out of Iran and sales in China plunged by nearly two-thirds.

Half of the overall 12.8 percent drop in sales by the maker of Peugeot, Citroen, DS, Opel and Vauxhall brands to 1.9 million vehicles was due to halting operations in Iran to avoid falling foul of US sanctions on the country.

While the Chinese car market has been shrinking since last year, PSA has been hammered, with its sales plummeting by just over 60 percent to 64,000 vehicles in China and southeast Asia.

Allied with its top investor, Chinese carmaker Dongfeng, PSA sold 742,000 vehicles in China in 2014, but sales have since spiralled lower as consumer tastes shifted.

PSA said it "is working on action plans with its partners to tackle current issues and lower the breakeven point" of its joint ventures in China, where foreign carmakers are required to work with local partners.

Sales in several other emerging markets were also hit hard, dropping by nearly 45 percent in Turkey and by half in Argentina.

PSA managed to resist a dip in European car sales well, increasing its market share, thanks in part to Citroen, which managed to tempt more buyers.

With 1.68 million vehicles sold in Europe, the region now accounts for 88 percent of PSA's overall sales, an increase of 11 percentage points from the same period last year.