PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

RISKS ASSOCIATEDWITH THE GROUP’S ABILITY TO MEET R&D INVESTMENT

1.5.1.4. NEEDS HIGHRISK

Riskfactors

Riskmanagement andcontrolprocesses

The businesssegmentin which Groupe PSAis evolvingrequires the Group to have a strong cultureof innovationso that it can continually reinvent itself and offer new products and new technologies in order to remain competitive. Nevertheless, thispermanent searchfor innovationcanproveto be a costlygambleif thechoicesthattheGroupmakesnevercometo market or failto meetwithapproval from its customers. PSAis facing a number of challenges: increase its future offer of ADAS, plug-in hybrids, ZEV and 1. connected services; be in a positionto maintainR&Dexpenditurewhichmay result 2. in Groupe PSA products becoming less technologically attractivethan market expectations; adopta consistent artificial intelligence strategy. 3.

To anticipateand continueits investment in researchand in the improvementof newtechnologies, the Grouphas implemented a number ofactionplans: ensure an adequatelevel of technologicalpreparednessfor 1. clean technologies, connected and autonomous vehicles: battery,fuelcell,AVA(autonomous vehicleprogramme forall), connectivity and strategic, in particular,software programmes; identifytechnological challengesandGroupe PSA’spositionin 2. the value chain: medium-termplan (including innovation) approved by the GEC,fundingassessment; prioritiseall AI projectsunder the joint managementof the 3. digitaldivision and the research and innovation division.

RISKS ASSOCIATEDWITH GROUPTRANSFORMATION AVERAGERISK

1.5.1.5.

Riskfactors

Riskmanagement andcontrolprocesses

[DPEF.B][DV.1]Managementof Companytransformations and social dialogue The far-reaching transformationsresulting from environmental demandsand customers’newexpectations are key to the Pushto Passstrategicplan.In orderto carryoutthesetransformations, the maturityand qualityof the socialdialoguewithinthe Companyis the key to success. The lofty ambitionsdisplayedby the Groupcan be witnessedat the highest corporate level and are reliant on demanding leadership. This dynamic must be sustained whatever the circumstances affectingone or moreexecutivemanagersso as to ensureresilience,particularly in termsof efficiency, financialresults and Company value.

To ensurethe successof its strategicplan,Groupe PSA relieson the shared willingnessof employeerepresentatives to co-build the future and support change within the Company. Built on responsiblerelationships,high-qualitysocial dialogue enablesthemostappropriateandmostpragmaticsolutionsto be found. The Group considers this ability to be a competitive advantage. (See 2.4.1) The Group’s ExecutiveManagement,as well as the operating units, are very much involvedin monitoringthis transformation which must be applied within operatingprocesses,employee behaviours and the corporate culture. Managementcontinuity is a key issue in terms of business stability. It is reliant on the replacementplans devised by the Supervisory Board.

RISKS ASSOCIATEDWITH THE DIFFICULTYOF POSITIONING DS AS A PREMIUM

1.5.1.6. BRAND AVERAGERISK

Riskfactors

Riskmanagement andcontrolprocesses

The DS brand, launched in 2015, has experiencedcommercial successin Europe,particularly in France,withits firsttwovehicles, the DS7 Crossbackand the DS3 Crossback.Competingagainst well establishedPremiumbrands,withgreatreputationsand large marketingbudgets,the DS brand still needs to demonstrateits sustainability as a new reference Premium Brand across all markets.The DS brand market share amountedto 0.3% of the European market in 2019(and1.2% ofthe French market).

The DS brand makes sure, along with the Programmes Department, that it launchesvehicleson a regularbasisso that it can offer a comprehensiveand consistentrange of compatible low-emissionproductsacross all markets.The Regionsand the DS brandhave introduceda networkrolloutplan with exclusive DS pointsof sale andspecific specifications. Productand servicequalityare monitoredto meet the specific requirements of premiumbrand customers.

29

GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT