New Citroen Could Be Lifesaver for PSA’s Madrid Plant

MADRID – PSA Peugeot Citroen will start to market its new Citroen C4 Cactus in earnest in June, but the automaker already is accepting orders from eager buyers.

A compact urban CUV, the C4 Cactus will try to repeat the success of the legendary 2CV (Deux Chevaux) by emulating the iconic car’s low-cost philosophy.

The new model will be assembled exclusively at PSA’s Madrid plant, which unlike the automaker’s other local operation – in Vigo, in northwest Spain – has been suffering through difficult times during the market’s recent dive.

Peugeot sold 71,062 light vehicles in Spain last year, while sister brand Citroen only reached 60,522.

The Madrid plant, which has a 150,000-unit annual capacity, produced only 55,000 vehicles in 2013, down from 77,000 in 2012 and far below the 125,000 units assembled in 2010.

Though some pre-series C4 Cactuses have been assembled in Madrid since October, currently production is focused on the small Peugeot 207 model, which is built on a single work shift.

Officially PSA has not announced production targets for the new model, but sources close to the auto maker estimate output at about 70,000 units in 2015, the first full year of production.

In the same year, another 10,000 units of the Peugeot 307 CC will be assembled.

Madrid had been looking to become the production site for a new multipurpose vehicle based on the C3 range. But in one of the last decisions of the frustrated PSA-General Motors alliance, the model was awarded to the Opel-GM plant in Zaragoza, Spain, creating uncertainty for the Madrid plant. Currently, about 1,600 workers are affected by scheduled production cutbacks at the facility.

But the C4 Cactus program could be turning fortunes around. PSA has begun hiring 200 new workers for a just-announced second shift, although these employees will be covered by a different labor contract.

New Pay Model

Yearly pay for new hires was reduced six years ago from €21,000 ($29,000) to €19,000 ($26,000), but according to La Tribuna de Automoción, a Madrid-based fortnightly newspaper entirely dedicated to the automotive industry, says it has been told by union sources minimum pay again will be reduced this year to €17,000 ($23,500). New hires will receive a special one-time bonus of €954 ($1,200).

The setup gives the Madrid plant three salary levels: Tiers 0, 1 and 2.

Newly hired workers will stay 18 months in Tier 0 at €17,000 per year before moving on to Tier 1. To get Tier 2 wages, a worker must be recommended to the higher level by plant management.

It is likely Tier 2 rolls will be continually reduced until that pay level disappears completely once veteran workers reach retirement.

Between 2013 and 2018, La Tribuna de Automocion says, about 600 workers will be semi-retired, meaning they will work only partial shifts alongside new Tier 0 employees. That will reduce overall labor costs for C4 Cactus production.

The new model will offer three engine choices: an 82-hp 1.2L gasoline 3-cyl. and 92- and 100-hp 1.6L diesels. Four equipment levels will be offered: Live, Feel, Shine, and Business, as well as two special series – Feel Cool and Feel Fine. Four special-edition models will be available at launch: Feel Silver, Feel Hello, Shine Moonlight and Shine Urban.

The wagon-like model’s exterior design is highlighted by “air bumps” in the outer door panels, which are said to enhance occupant protection in the event of a side impact, but also provide a unique aesthetic.

Prices will range from €14,750 ($20,353) for the entry version to €20,300 ($28,012) for the top-end Shine Edition Urban with the 100-hp diesel.