ARGENTINA PRESS KIT NOVEMBER 2010

CONTENTS Page

Milestones in PSA Peugeot Citrons Development in Argentina... 2 PSA Peugeot Citron in Argentina... 4 Peugeot and Citron in Argentina.... 6 PSA Peugeot Citron Sales in Argentina.... 8 The Argentine Automobile Market.... 9
Milestones in PSA Peugeot Citrons Development in Argentina
Peugeot creates Safrar (Socit Automobile Franco-Argentine), an assembly, import and distribution subsidiary. Assembly start-up of the Peugeot 404. Production start-up of the Peugeot 504. Safrar Peugeot and Fiat Automobiles create Sevel (Sociedad Europea de Vehiculos para Latinoamrica). Argentinas Macri Group acquires Peugeots 50% interest in Sevel. Sevel is floated on the Buenos Aires Stock Exchange. Production start-up of the Peugeot 405. Fiat sells its remaining 15% interest in Sevel to the Macri Group. Citron signs an exclusive import and distribution agreement with Sevel. License granted by Fiat to Sevel expires. Production start-up of the Peugeot 306. PSA Peugeot Citron acquires a 15% interest in Sevel. PSA Peugeot Citron buys 35% of Sevel from the Macri Group, thereby raising its interest in the company to more than 50%. Sevel carries out a $30 million share issue. Production start-up of the Peugeot Partner and Citron Berlingo. PSA Peugeot Citron raises its interest in Sevel to 82.1% by purchasing the Macri Groups 32% interest. Sevel carries out a $150 million share issue. Production start-up of the Peugeot 206. PSA Peugeot Citron launches a public offer to purchase all outstanding Sevel shares it does not already own. PSA Peugeot Citron raises its interest in Sevel to 99.8%. Creation of Peugeot Citron Argentina (Sevel is delisted from the Buenos Aires Stock Exchange). Introduction of the new mid-range vehicle platform announced. Production start-up of the Peugeot 307.

1997 1998

July 1999
Nov. Dec. 1999 Feb. 2000 Feb. 2003 March 2004

Sept. 2004

Ambitious manufacturing development plan announced, involving an investment of ARS 450 million (125 million) over three years to launch two new cars, with a production target of 100,000 vehicles (met in 2006) and the creation of more than 1,000 new jobs. Production start-up of the Peugeot 307 Sedan. Creation of the new Mercosur Business Unit, based in Rio de Janeiro and led by Vincent Rambaud. Production start-up of the Citron C4 Sedan. Third shift introduced at the Palomar plant. $500-million investment programme announced to design and produce vehicles for the Mercosur countries. Market launch of Mercosur versions of the Peugeot 207. Production start-up of the Citron C4 hatchback. Launch of the Citron Berlingo and Peugeot Partner. Inauguration of the Buenos Aires Tech Center. Production start-up of the Peugeot 408.
May 2006 Feb. 2007 April 2007 Oct. 2007 Dec. 2007 June 2008 August 2008 April 2010 Sept. 2010 Nov. 2010
PSA Peugeot Citron in Argentina
The Produccin Mecnica y Vehculos Argentina (PMVA) unit comprises two plants: - The Palomar assembly plant - The Jeppener engine plant, located 90 km from El Palomar, south of Buenos Aires. The Palomar assembly plant Surface area: The Palomar assembly plant is built on a 218,000 square-meter site. Employees: 5,450 people (Sept. 2010) Vehicles produced: Peugeot 206 Gnration, Peugeot 207 Compact, Peugeot 307 (sedan), Citron C4 (sedan and 5-door), Peugeot Partner and Citron Berlingo (car and light commercial vehicle versions) and Peugeot 408. Production: Expected 2010 output: 134,000 vehicles in two shifts (2009: 86,600 units) Peugeot 206, 207 Compact Peugeot 307 and 408 and Citron C4 and C4 Sedan Partner and Berlingo Certification: - Quality: ISO 9001:2000 certification first earned in December 2003 and renewed in 2006. - Environment: ISO 14001 certification awarded in January 2001 and renewed in January 2007. Defining characteristics: - The Palomar production centre has the advantage of being near Argentinas primary car market. Previously located outside the city, the site is now part of Buenos Aires expanding metropolitan area. - Flexible manufacturing systems enables the plant to produce a wide variety of models. - Production is focused on the regional export market, with more than 50% of output sold outside the country. - As Argentinas largest car plant, Palomar has a major presence in the country.

The Jeppener engine plant Surface area: Total surface area: 132,000 square meters Built-up area: 36,000 square meters Employees: 359 people Production: - Chassis systems - 5,000 DW8 and DW10 diesel engines per year
- 60,000 TU3 and EW10 petrol engines per year - Machining and assembly of TU3 engine blocks and cylinder heads; oil pumps. Defining characteristics: - More than 200,000 engines have been produced since the plant opened in March 2002.
Peugeot and Citron in Argentina Peugeot Peugeot has been present in Argentina since the beginning of the countrys automotive history. It is currently the markets sixth best-selling brand. Milestones March 2004 May 2006 June 2008 April 2010 Nov. 2010 Introduction of the 307. Introduction of the 307 Sedan. Launch of Mercosur versions of the 207. Launch of the Peugeot Partner. Production start-up of the Peugeot 408.
Sales: In the first nine months of 2010, Peugeot sold 43,800 cars and light commercial vehicles, representing market share of 8.8% and a 16% increase from the prior-year period (37,600 units). Network: 63 dealerships and 104 sales outlets. Models: Cars: 206, 207, 207 Compact (Mercosur), 307, 407, 308CC, 807, 3008 and Partner. Light commercial vehicles: Partner and Boxer, Expert. Peugeot vehicles on the road in 2009: 7 years old or less: about 323,700 vehicles 10 years old or less: about 365,000 vehicles
Vehicles produced in Argentina: 206 Sedan, 3- and 5-door 207 Compact, 307 Sedan, Partner car and commercial vehicle versions Vehicles produced in Brazil: 4-door 207 Compact, 207 SW and Boxer (PSA Peugeot Citron/Fiat Iveco partnership).
Citron Citron first entered Argentina in 1925 and returned in 1997. It now ranks eighth in the local automobile market. Milestones: March 2010 April 2010 Introduction of the C3. Launch of the Xsara Picasso. Introduction of the C6, C4 coupe and C4 Sedan. Introduction of the 5-door C4. Launch of the Grand C4 Picasso. Launch of the C4 Picasso. Launch of the Citron Berlingo.

2009 sales: In 2009, Citron sold 20,300 cars and light commercial vehicles, unchanged from 2008 and representing a 4.1% share of the Argentine market. Network: 43 dealerships. Models: Cars: C3, Berlingo, 5-door C4, C4 Sedan, Xsara Picasso, C4 Picasso, Grand C4 Picasso, C5. Light commercial vehicles: Berlingo, Jumper. Citron vehicles on the road in 2010: 10 years old or less: about 150,000 vehicles Vehicles produced in Argentina: Berlingo car, Berlingo light commercial vehicle, C4 Sedan, 5-door C4. Vehicles produced in Brazil: Xsara Picasso and C3.
PSA Peugeot Citron Sales in Argentina
First nine months of 2010 (cars and light commercial vehicles) Volume Market as a whole 495,671 % change year-on-year +25%
Volume PSA Peugeot Citron Peugeot Citron 62,436 37,616 16,707
% change year-on-year +14.9% +16.4% +11.7%
Market share, first nine months of 2010 12.6% 7.6% 3.4%
2009 (cars and light commercial vehicles) Volume 494,012 Volume PSA Peugeot Citron Peugeot Citron 66,135 45,799 20,336 % change year-on-year -19% -23% -23% % change year-on-year -14.2% Market share 2009 13,4% 9.3% 4.1%

Market as a whole

The Argentine Automobile Market
Background The origins of the Argentine automobile industry date back to the countrys industrialization in the 1950s. Over the ensuring years, the industry has experienced three distinct periods. Until the 1960s, the industry was organized primarily around local manufacturing subsidiaries of foreign carmakers, while Argentine manufacturers remained relatively small players. Nevertheless, by the end of the decade, the country had fairly significant automobile production capacity. The period from the late 1960s to the early 1990s was one of severe economic and political instability and across the industry, companies had to adapt their marketing and industrial strategies to the new environment. General Motors and Citron decided to pull out of manufacturing in Argentina in 1978, and the following year, Chrysler sold its plant to Volkswagen, allowing the German carmaker to establish a local manufacturing presence. Peugeot and Fiat suspended production in Argentina in 1980 and granted manufacturing licenses for their models to Sevel SA (a local company whose main shareholder was Francisco Macri), in order to maintain a marketing presence in the country. In 1987, Ford and Volkswagen decided to share the risks of operating in Argentina by merging their local subsidiaries within a new company, Autolatina SA. When combined with the economic and political situation, these mergers and acquisitions caused the Argentine automobile industry to become somewhat isolated. Local content rose sharply and trade with the rest of the world dried up (apart from a brief liberalisation at the start of the 1980s). Model line-ups were limited and in many cases obsolete, due to the burden of amortizing development costs for parts and components designed solely for the Argentine market. The third period, which began at the start of the 1990s, saw a marked improvement, helped by more predictable trends in economic variables (particularly exchange rates, following the decision to peg the peso to the dollar) and by government policies designed to actively support the automobile industry. Direct foreign investment increased and leading international carmakers returned to the country, starting with General Motors in 1995 and Chrysler and Toyota in 1996. At the same time, some locally-owned businesses reverted to European ownership, with Renaults acquisition of Ciadea SA and PSA Peugeot Citrons acquisition of Sevel SA in 1998. The year before, Fiat had terminated the manufacturing license granted to Sevel SA and built its own plant in Crdoba. Despite the deep recession at the beginning of the new millennium, the cycle that began in the 1990s has been the Argentine automobile industrys most prosperous period ever. Between 2004 and 2006, direct foreign investment reached some $1.5 billion. Since the economy began to recover in 2002, the automobile industry has experienced strong growth in output, exports and total sales. The market nevertheless slowed considerably in the last quarter of 2008.

However, the recession at the start of the millennium radically reshaped the Argentine automobile market. Compared with the 1990s, for example, the market saw: - An increase in the number of vehicles designed and developed in Mercosur countries and a decline in vehicle imports from outside Mercosur. - A falloff in sales in the lower-midrange segment (which accounted for 60% of the market in the 1990s) and emerging demand for affordable popular models. - A reduction in credit sales (50% of automobile purchases were financed by credit in the 1990s versus 30% today). Unit sales in the Argentine market (cars and light commercial vehicles) The Argentine market shrank by 14.2% to 494,000 units in 2009, but is expected to rise 25% to 620,000 units in 2010. The Argentine automobile market
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Automobile strategy The Argentine government has made the automobile industry a key priority of its industrial development strategy. To support this initiative, it has devised a local automobile production policy focused on regional integration that protects investments in the country from imports of finished vehicles produced in Mercosur and associated member countries. In particular, there is a 35% tax on imported finished vehicles and to promote the export of Argentineproduced units, a programme has been established to eliminate import duties (between 14% and 18%) on components that are used in vehicles and subsequently exported. On the other hand, to encourage the development of the local automotive equipment industry, there are strict local content requirements for regionally-sold vehicles that are exempt from import duties. In addition, a subsidy is offered to manufacturers who buy locally-produced components via new investments.
Automobile production The Argentine automobile industry has sharply increased its output, with forecast production of 710,000 units in 2010. The robust 38% gain follows a decline in production due to the global recession, which negatively impacted automobile industries worldwide. PSA Peugeot Citron, General Motors, Ford, Toyota, Renault, Volkswagen, DaimlerChrysler, Iveco, Fiat and Scania all have production facilities in Argentina. Argentine automobile production
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