PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

RISKS ASSOCIATEDWITH CHANGES INDISTRIBUTIONMETHODS AVERAGERISK

1.5.2.8.

Riskfactors

Riskmanagement andcontrolprocesses

The Group is exposedto the risks inherent in new methodsof distribution (such as the digitalisationof points of sale) and consumption (significant increasein the sale of electrifiedvehicles (electric or hybrid)). Delays in the digital transformationof distributionmethods(at pointsof sale, in salesnetworks), inflated distributioncostsandan inabilityto sell electricvehicles(fromsale to after-sale)may, in particular, generate image and financial risks.

In the lightof theserisks,the Sales& MarketingOfficeintroduced plans to manage the following risks: design, developmentand rollout of digital tools (online sales, > improved websites & point-of-sale tools, electric vehicle simulators, etc.) from central administration to points of sale; a network transformationplan (reductionin the number of > points of sale, multi-brand sites, simplified sales policies, reduction in chargesinvoicedto dealerships, etc.); skillsdevelopment for dealershippersonnel via trainingmodules > tailoredto the saleof newvehicles(connectedvehicles,electric vehicles); rolloutof call centres to respond to customer queries. >

RISKS RELATEDTO NEWVEHICLE DEVELOPMENT, LAUNCH AND MARKETING

1.5.2.9. AVERAGERISK

Riskfactors

Riskmanagement andcontrolprocesses

Thedecisionto developnewvehiclemodelsor subassemblies and to introduce them in the market is backed by marketingand profitabilitystudiescarriedout severalyears prior to their actual launch. In the context of an increasinglyresponsiveautomotive market,this timegap puts forecastvolumesat risk and ultimately generatesa financialrisk (lossof valueof fixedassets,payablesto supplierswhowouldhave invested based on estimated volumes). The developmentof vehicles and subassembliesis exposed to continuous changes in regulations which impose increasingly stringentrequirements,particularly in termsof fuel economyand emissionsof CO 2 andpollutants. (See paragraph 2 below). These changes, together with strong consumeristtrends, may determinestructuralmodifications in the market(for example,the internal-combustion/PHEV/electric mix), to which the manufacturing facilities cannot always adapt immediately. Technicalrisks relatedto productqualityand safetycan lead car manufacturers to recallvehicles.

The AutomotiveProgrammesDepartmentaims to translatethe Groupe PSA’sstrategy into product plans and ensure their implementationby steering the developmentof vehicle and subassembly programmes and being responsible for their economic performance.The ProgrammesDepartment has a Strategyunit that anticipatesmarket-shaping forces,particularly the changes in the energy mix in coming years (internal combustion/PHEV/electric). The Group relies on an efficientoperationaldevelopmentplan. For each vehicle and subassemblyproject, a set of product services,profitability,quality and time-to-marketobjectivesare set. Progressin meetingtheseobjectives is ensuredby a system of project milestones approved by the Global Executive Committee. In addition, the Quality Department authorises (or refuses)the sale of each vehiclethat leaves the production line and organises any necessary recalls of faulty vehicles deliveredto dealersor customers. The Group attachesthe utmost importanceto exchangeswith regulatory authorities to anticipate design plans and capital expenditures required to meet scheduled changes in regulations. Concerning the approvalof its vehiclesby regulatoryauthorities, the Group notes that they comply with the various pollutant emissionsregulations.

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT