Peugeot Citroen boss pledges return to profit by 2018

Chinese employees at Peugeot’s state-of-the-art factory in Wuhan in central China, which was opened in July last year. Photograph: Shepherd Zhou/EPA

Peugeot Citroen's new chief executive has vowed to return the struggling French carmaker to profit on car manufacturing by 2018, as he set out a long-awaited recovery plan.

Unveiling a programme labelled Back in the Race, Carlos Tavares said the group would draw on its recent rescue by Chinese investors and the French state. He promised to reverse losses in Europe and emerging markets by reducing costs, excess plant capacity and the number of models on offer.

Peugeot Citroen has struggled to adapt to the shrinking European car market, with sales falling 5.4% last year in a global market that grew 4.2%.

After losing more than €7.3bn (£6bn) in two years, Peugeot struck a rescue deal in February to sell two 14% stakes – one to the French government and one to China's Dongfeng motor group – as part of a €3bn cash infusion.

Investors welcomed a return to positive earnings goals but were sceptical regarding the size of the task.

"While they see themselves as back in the race, they don't seem to realise that the competition is moving forward just as quickly," said Barclays analyst Kristina Church.