PSA Peugeot Citroën and BMW Group present the Industrial Plan for their Cooperation

(Douvrin, France - June 21, 2005) - PSA Peugeot Citroën and BMW
Group presented today the industrial plan for their cooperation, which
is designed to produce a new family of small 4-cylinder petrol engines
that will be used in both partners' vehicles (Peugeot, Citroën and
MINI). The cooperation strengthens high-level manufacturing expertise in
Western Europe industrial facilities both in France and in the UK. The
main engine parts will be machined exclusively at PSA Peugeot
Citroën's Douvrin plant in Northern France, with engine assembly
divided between each partner's facilities-Douvrin for PSA Peugeot
Citroën and Hams Hall in the UK for MINI-to facilitate the
logistics of supplying each manufacturer's car plants. The
cooperation has required the deployment of an efficient, flexible
organisation tailored to meet the requirements of managing discrete
assembly processes at two geographically separate production locations.
As part of the project, a complete production module will be brought on
line in late 2005 at the Française de Mécanique plant in
Douvrin. The principle of the module is based on the development of a
highly integrated, independent production unit that can easily be
reproduced on other sites and brings together the machining lines for
the main engine components-cylinder head, crankcase, crankshaft and
connecting rod-and the assembly lines. This efficient industrial
organisation, based on the production of 2,500 units a day, represents
an optimal solution in terms of efficiency and return on investment.
Covering a surface area of approximately 60,000 square metres, this
first module required an investment of €330 million. It will be
able to produce an engine every 26 seconds, regardless of the version.
At full capacity, it will be run by 1,120 employees working in four
shifts, who will have received 152,000 hours of training. The Hams
Hall plant will assemble engines for future variants of MINI. Its
location near the BMW Group's Oxford plant will allow for fast,
accurate, flexible management of just-in-time-sequence deliveries,
resulting in reduction in stock levels and delivery times. PSA Peugeot
Citroën's Charleville and Mulhouse Metallurgy Division plants will
also be integrated into the industrial plan as suppliers of raw
castings. A large number of innovations has been introduced in these
plants, including: - The lost foam process for the cylinder heads. -
Pressurized aluminum casings with cast-iron jackets inserted into the
casting. - Steel crankshafts with unmachined counterweights. -
Connecting rods forged using the double impression method. Quality
management is a high priority for both partners, which is why the
quality of both machined and purchased parts is managed using standards
common to BMW Group and PSA Peugeot Citroën. The partners are
implementing a coordinated process to support full, real-time
transparency between the two engine plants, in order to deal
effectively with any type of quality issue that might arise. In 2002,
PSA Peugeot Citroën and BMW Group announced their intention to
jointly develop and produce a new range of small, high-technology
petrol engines, in high volumes and cost competitive conditions. The
cooperation leverages both partners' technological expertise as well as
their in-depth understanding of large series production processes. Once
at its maximum production capacity, the overall annual production will
reach 1 million units.