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The story of Citroën begins with the founder of the company himself, André Citroën. After serving in the French army, he set up a gear-making business. In 1919, however, the business started to produce automobiles, beginning with the conventional Type A.
In 1924, Citroën began a relationship with American engineer Edward Gowan Budd. From 1899, Budd had worked to develop pressed-steel bodies for railroad cars, Pullman in particular. Budd went on to manufacture steel bodies for many automakers, Dodge being his first big auto client. In 1928, Citroën introduced the first all-steel body in Europe. By 1930, Budd had created a prototype for Citroën with a unibody and front wheel drive. It was this prototype that evolved into the Onze Légère and 7 CV (5 kW) Traction Avant of 1934. These cars would set the pattern to be followed thirty years later by the Mini, Volkswagen and nearly every other manufacturer.
In the beginning, the cars were successful. But soon competitors, who still used a wood structure for their bodies, introduced aerodynamic body designs on their cars. Citroën had no way to redesign the body of his cars and the cars began to be perceived as old-fashioned. The Citroëns sold in large quantities despite the stylistic drawback, but the car's low price was the main selling point and Citroën experienced heavy losses. That encouraged André Citroën to develop the Traction Avant, a car so innovative that to it the competition would have no response. Achieving quick development of the Traction Avant was, of course, expensive and contributed to the financial ruin of the company.
Citroën also sponsored some expeditions in Asia (Croisière Jaune) and Africa (Croisière Noire), intended to demonstrate the potential for motor vehicles to cross inhospitable regions. The expeditions conveyed scientists and journalists and were a publicity success.
In 1934, debt forced the company into foreclosure; it was then taken over by its biggest creditor, the tire company Michelin.
Citroën unveiled the 2CV at the Paris Salon in 1948. This car become a bestseller and even a 4wd version with 2 engines where sold in limited numbers.
1955 saw the introduction of the DS, which was the first full usage of Citroën's now legendary hydropneumatic suspension system that was first tested on the rear suspension of the last of the Tractions. The DS featured power steering, power brakes and suspension and directional headlights. The same high-pressure system was used to activate pistons located in the gearbox cover to operate the clutch on their "Citromatic", Citroën's version of a semi-automatic transmission. This high-pressure hydraulic system would form the basis of many Citroën cars , including the SM, GS, CX, BX, XM, Xantia and C5.
In 1965 Citroën took over the French carmaker Panhard in the hope of using Panhard's expertise in midsize cars to complement its own range of very small, cheap cars (e.g. 2CV/Ami) and large, expensive cars (e.g. DS/ID). In 1967 Citroën took control of Maserati, the Italian sports car maker and launched the sports car/Grand Tourer SM, which contained a V6 Maserati engine. This maneuver was unfortunately-timed, with the impending 1973 energy crisis soon to make GT manufacture unprofitable.
Huge losses caused by failure of the Maserati tie-up coupled with crippling warranty costs by the unreliable GS and high developement cost of CX led to Peugeot taking over Citroën in 1976. The combined company was known as PSA Peugeot Citroën, PSA sold off Maserati to DeTomaso soon after.
In the 1980s, Citroën models were increasingly Peugeot-based. The BX of 1982 still used the hydropneumatic suspension system, but was powered by Peugeot-derived engines. By the late 1980s, PSA used extensive platform sharing. The XM, for example, used the same engines and floorpan as the Peugeot 605, and the Xantia of 1993 was identical under the skin to the Peugeot 406.
Citroën developed a small car for production in Romania known as the Oltcit, which it also sold as the Citroën Axel.
Citroën's ambitious attitude to engineering and styling was squeezed out in favor of Peugeot conservatism. The ubiquitous 2CV was finally killed off in 1990, production having moved from France to Portugal.
In spite of the problems between Peugeot and Citroën, Citroën has continued its tradition for innovation, exemplified by new vehicles such as the C2 and the Xsara Picasso. It has even expanded into new markets, for example in China where the C3 and Xsara are alongside the ZX Fukang and Elysée local models. The introduction of even newer models, such as the long-awaited XM replacement, the C6, indicates Citroën's continued commitment to innovation in the 21st century.
Proof of this good health, in 2005, for the first time in its history, Citroën is planned to reach a total worldwide production of 1,000,000 cars.