PSA_GROUP_REGISTRATION_DOCUMENT_2017

ANALYSIS OF THE BUSINESS AND GROUP OPERATING RESULTS IN 2017 AND OUTLOOK Automotive Expertise to deliver useful technologies

In 2017, Groupe PSA launched a new OpenLab in Morocco, entitled “Sustainable mobility for Africa”, based on an agreement with five Moroccan universities, two American universities with a presence in Morocco, an Écoles Centrales engineering school based in Morocco, and a technology centre at the International University of Rabat. The “institutions” ecosystem incorporates ministries, local administrations, the French National Research Agency (ANR), Agency for the Environment and Energy Management (ADEME), competitiveness clusters and the European Commission. Under this ecosystem, Groupe PSA is an active member of automotive industry competitiveness clusters (MOV’EO, Véhicule du Futur, ID4car) which foster collaborative projects, close relationships with SMEs and startups and encourage meetings with new potential partners. In 2017, Groupe PSA participated in 22 projects with European funding in a number of areas, among them: the connected autonomous vehicle, particularly through the „ SCOOP and L3PILOT projects; new urban-mobility objects through the EU-LIVE project; „ the factory of the future, featuring the Thomas, Versatile and „ Scalable projects; some ten projects supported by the French State, chiefly through the French National Research Agency (Agence Nationale de la Recherche), the Public Investment Bank (Banque Publique THE R&D BUDGET 4.5.4.1. In 2017, capitalised R&D investment and expenditure amounted to €4,713 million (including €436 million in non-recurring investment), of which €1,432 million for Faurecia, compared with €2,673 million in 2016, of which €389 million for Faurecia (including income of €604 million from the sale of the Automotive Exteriors activity), and €2,695 million in 2015, including €915 million for Faurecia. Groupe PSA will continue its programme to optimise and make more effective its R&D expenses and investments, keeping them within a controlled scope. For further information, please refer to Note 5.3 to the 2017 consolidated financial statements, Section 5.6, below. 2017 featured a good many commercial launches throughout the world, illustrating the deployment of the Core Model and the Core Technology Strategy: new body styles: Peugeot 5008 (Europe and China), Citroën C5 „ Aircross (China) and C3 Aircross (Europe), and the Opel Grandland X and Cross land X (Europe) developed with the Opel Vauxhall teams; aboard the new DS 7 Crossback, unveiled in 2017 and marketed in „ early 2018, are the first automatic driving functions and the 3rd generation of the Connect Nav electronic data system. It will be launched in Europe, then in China; “Updated” cars: Peugeot 308 and 301 (Europe) and Partner (Latin „ America), restyled Citroën C5 (China), Elysée (Europe) and Partner (Latin America); KD (Knocked Down) projects, conducted with our local vehicle „ production and marketing partners: Peugeot Pick up (Africa), Peugeot Expert and Citroën Jumpy (Uruguay), Peugeot 3008 (Vietnam); the e-Mehari 2, in partnership with Bolloré; „ the launch of the new-generation Puretech and BlueHDi engines; „ the two new gearboxes: the 6-gear manual box developed using „ 100% digital technology, and the 8-gear automatic box (EAT8). R&D effectiveness 4.5.4.

d’Investissement) and the Agency for the Environment and Energy Management (ADEME), in a variety of areas such as: adapting the autonomous-vehicle automation strategy to the „ needs and condition of drivers with the AutoConduct project; passenger-compartment air quality with the QAlcars project; „ development of innovative battery packs with the Équipements „ Innovants du Véhicule Electrique project (innovative equipment for electric vehicles). The “business” ecosystem incorporates SMEs, VSEs, startups and businesses from a variety of industries involved in the innovation process to enhance business agility and help seize new scientific, technological and businesses opportunities as early as possible. In 2017, Groupe PSA, in partnership with Le Village by CA Paris, issued a „ call for innovations to start-ups and SMEs of the the circular economy: “My Car, designed for second life”. 68 candidate projects were submitted. They were analysed to identify collaborative opportunities that could be taken up during 2018; Groupe PSA and the nuTonomy start-up signed a strategic „ partnership agreement for the testing of fully autonomous vehicles in Singapore; Ericsson, Orange and Groupe PSA signed a partnership „ agreement for technical experimentation around 5G in order to validate potential automotive uses of this technology. Groupe PSA’s R&D has a global reach and is built around four clusters that support the Group’s international development: an R&D cluster in Europe „ the main base in France , in charge of the early phase, the „ design and engineering of vehicles and subassemblies: divided between three R&D centres and their three testing „ sites: Vélizy/La Ferté-Vidame, Sochaux/Belchamp and La Garenne-Colombes/Carrières sous Poissy, with a workforce of 9,425 employees at end 2017 working „ within the PCD scope; an Opel Vauxhall technical development centre at Rüsselsheim, „ in Germany, with a workforce of 7,550 employees at the end of 2017; two sites with our partner Dongfeng Motors: Shanghai (the Group’s China Tech Centre) and Wuhan, in charge of developing new prototype vehicles, modifying engines and fostering local integration, one site with our partner Changan in Shenzhen, responsible „ for local integration and manufacturing; with a workforce of 2,650 people, of whom 2,000 are involved „ in the two joint ventures; an R&D cluster in Latin America , at São Paulo, dedicated to local „ integration and industrialisation, with a workforce of 500 people; an R&D centre in Morocco , located in Casablanca since July 2017, „ to support Groupe PSA’s development in the Africa Middle East Region, mainly as part of the construction of the Kenitra industrial site scheduled for completion in 2019. At end 2017, the MTC (Morocco Technical Center) employed a workforce of 202 staff; an R&D cluster in China : „ with three R&D centres: „ GLOBAL IMPACT OF R&D 4.5.4.2.

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GROUPE PSA - 2017 REGISTRATION DOCUMENT