Peugeot Rises as Goldman Says Vehicle Pricing Improving

PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, rose the most in four months after an analyst at Goldman Sachs Group Inc. said the manufacturer has been able to charge more for vehicles because of new models.

Executives from Peugeot “highlighted significant progress” in its earnings-revival strategy during recent meetings, Justine Dingley, a London-based analyst at Goldman, said in a research report dated yesterday. An industrywide focus on profitability, “along with PSA’s attractive model portfolio, has helped it to improve price realization in Europe,” and to narrow the first-half loss.

Peugeot jumped as much as 6.7 percent, the steepest intraday gain since Feb. 21, and was trading up 4.2 percent at 10.44 euros at 5:17 p.m. in Paris. The stock has gained 34 percent this year, valuing the carmaker at 8.16 billion euros ($11.1 billion). Jonathan Goodman, a spokesman at the company, declined to comment.

The carmaker sold 3 billion euros in stock earlier this year, and brought in Chinese partner Dongfeng Motor Corp. and the French state as investors, to finance a turnaround. Chief Executive Officer Carlos Tavares’s strategy includes investing in hybrid drives, reorganizing operations in South America and Russian and scaling back the model lineup while turning the DS badge, currently a unit of the Citroen nameplate, into a full-fledged premium auto brand.

The company, based in Paris, has been unprofitable since mid-2011, hurt by a contraction in Europe’s car market that led to a two-decade low in industrywide demand last year. The company’s sales in the region rose 4.2 percent in May, helped by demand for the 2008 compact sport-utility vehicle and 308 hatchback.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net Tom Lavell

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