PSA - 2019 Universal Registration Document

DECLARATION ON EXTRA-FINANCIAL PERFORMANCE Societal commitment to sustainable development

SOCIETAL COMMITMENT TO SUSTAINABLE 2.3. DEVELOPMENT

Responsible supply chain management 2.3.1.

SUPPLIERS: VITALLINKS IN THE VALUE CREATION CHAIN

2.3.1.1.

 DPEF.30 

Automotive purchases The Group’spurchasesinclude:

Purchasing is a key function for the Group’s international developmentand its integrationin the industrial landscapeof all countrieshaving local operations.Long-termrelationshipswith its suppliers are crucial for Groupe PSA.The PurchasingDepartment pursueson creatinga “win/win”situation.The aim of this approach is that each partner will share its know-how and establish a long-term relationship throughan ongoing improvement process.

direct material parts: purchases of direct vehicle parts and n mechanical subassemblies, direct purchase of materials. Purchasingof serialpartsrepresentmorethan75%of production cost of a vehicle; spareparts andaccessories; n indirect machinery & equipment: SG&A, services, commercial n facilities, competition, information technology andtelecoms.

WORLDWIDEPURCHASESIN 2019BY REGION

China and Southeast

Middle East Africa

Europe

Eurasia Latin America

Asia India-Pacific

Total

(in million euros)

Direct parts Spare parts

30,740

162

543

32

15

261

31,753 1,669

1,669

Indirect Machinery & Equipment

8,466

24

151 

272 305

102 363

9,015

TOTAL

40.875

186

694

15

42.438

Groupe PSAAutomotivedivisionpurchasesamountin 2019reached €42 billion,which corresponds to 57%of the Group’s revenue. Faureciahas a specialstatus– on the one hand beinga subsidiary, on the other also a supplierto other car manufacturerswhich are direct competitorsof Groupe PSA.This requiresthese units to be strictly separated,includingthe purchasingfunction.However,the principlesof responsibilitywithinthe Groupand a strategicsupplier apply. The Group aims to surrounditself with supplierswho, by virtue of their sound financial structure and capacity for innovation, are capableof supporting the Group’s global expansion. Local sourcing akey elementof Groupe PSA procurement policy Giventhe economicchallengesof its presencein hostcountries,the Group is committedto make supplier relationshipmanagementa key elementof its strategy.It believesthat deployinga responsible purchasingpolicymeanssourcingsuppliersas close as possibleto its production plants. This enablesto: reducethe Group’scarbonfootprintby meansof environmental n optimization of upstreamlogistics; enroll suppliers in a forward-thinkingapproach to technology, n logistics andCSR; increase the Group’s due diligence by virtue of operational n proximity to its partners.

The local sourcingratio is the value of purchasesfor a regionfrom Tier 1 suppliersdividedby the total value of the purchasesfor this region.For example,the localsourcingrate is 89%in Europe,60%in Marocco and58.9% inLatin America. Groupe PSAis a full-fledgedpartner to its host countries.Thus, it commitsto continueto enforce its strategyto source as close as possible nearby its production plants, which also contributes to maintainsubcontracting activities on-site. Thanks to its deep manufacturingroots in France (1,226 million vehicles produced in France in 2019, the Group has once again madea strongpositivecontributionto France’stradebalance,with €4.4 billion surplus and a positive import-export balance of 379,000 vehicles in 2019. In total, 12 Group vehicles are currently certified OrigineFranceGarantie , a label which ensuresconsumers that the product is French-made. Focusing on the Moroccan supplier cluster: Groupe PSAalmost finished the engine and vehicle assembly plant at Kenitra (near Rabat) in Morocco. The productionplant is built on an area of 100 hectares,of which 40 are reservedas supplier cluster. By the end of 2020 the plant will already increase capacity from initial 100,000 toproduce200,000 vehicles. TheGrouphas achieved60% local integration (vehicle and engine components) as the first vehicle has been produced in September 2019,with a long-term goalof 80%.At the endof 2019the projecthas created1,800 direct jobs for Groupe PSA, 3,700 direct jobs with our suppliers and 20,000 indirect jobs.

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT