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PARIS, Jan 28 (Reuters) - French auto maker PSA Peugeot Citroen said on Tuesday it expects to make annual savings of one billion euros by 2006 thanks to its cost-cutting plan.
In slides to be presented to a meeting of analysts and reporters by CEO Jean-Martin Folz, PSA said its strategy of sharing parts across model lines had already helped reduce costs per vehicle by 300 euros ($325).
Europe's second largest carmaker said it expected further to reduce the cost per vehicle by 150 euros by 2006, taking savings between now and then to 800 million euros a year.
In addition, further manufacturing improvements would generate extra annual savings of around 350 million euros by 2006.
"Together these initiatives are expected to generate more than one billion euros a year in savings by 2006," the slides showed.
By 1024 GMT, PSA shares were up 3.38 percent at 37.94 euros, outperforming the DJ Stoxx European auto index that was 2.2 percent firmer at the time.
PSA said the cost saving plan would also help it increase output to meet its target of four million cars in 2006 -- a 26 percent increase on its car sales in 2002.
PSA sales rose 4.3 percent to 3.267 million units in 2002, bucking a negative trend in the western European car market and lifted by buoyant demand in Brazil, central and eastern Europe and China.
To boost output it has introduced new production schedules, extended operating hours and increased European capacity.
PSA said its shared platform strategy was now fully in place and that its three branches accounted for 60 percent of total output -- despite only half of the expected gains being achieved by the end of last year.
It said the strategy would boost profitability further by 2006.