PSA CEO Tavares targets VW as he scraps unprofitable cars, upgrades DS subbrand
Photo credit: Reuters
PSA/Peugeot-Citroen CEO Carlos Tavares is aiming the company's Peugeot brand directly at Volkswagen Group's core VW marque as part of his Back in the Race turnaround plan for the struggling French automaker. Tavares wants to transform Peugeot from a general mass-market brand into what the French auto industry calls a haute de gamme (top of the range) volume automaker selling cars that command prices in Europe as high as VW models. If the plan works, it will help PSA return to sustainable profitability.
When he presented his Back to the Race business plan for PSA in Paris last month, Tavares said the net pricing of Peugeot cars in Europe was 6.5 percent lower on average than comparable VWs. He aims to reduce this gap to 4.7 percent by 2016 and cut it to 0 percent to 3 percent by 2020.Tavares says that Peugeot models such as the 208 subcompact, 2008 small SUV and 308 compact already match their VW rivals in terms of technology and quality.
To lift Peugeot’s transaction prices, Tavares wants the brand to focus on a smaller range, with its lineup reduced to 16 models by 2018 from 25 now and to 13 models by 2022. He also wants to reduce brand engineering and overlapping between the Peugeot and Citroen marques and focus on segments that have global appeal. Tavares did not give details on how the model ranges of Peugeot and Citroen will look in future or say which models will be axed, but industry watchers and company insiders told Automotive News Europe that the Peugeot brand likely will:
Stop selling minicars when the just-launched 108 comes to the end of its life cycle at the end of this decade, leaving this low-margin segment to Citroen
Not replace the 807 large minivan, also leaving this segment to Citroen
Not replace the 207CC and 308CC coupe-cabriolets that compete in a fast-declining European segment in which Citroen does not sell cars.
The Peugeot brand will focus its lineup on the three biggest global volume segments worldwide -- B (subcompact), C (compact) and D (mid-sized), with body styles including hatchbacks, sedans and wagons. The Peugeot brand will offer crossovers in the C- and D-segments based on PSA’s MP2 modular vehicle architecture. The slow-selling 4008, which is based on the Mitsubishi ASX, will not have a successor. The 3008 and 5008 crossovers, both based on PSA platforms, have sold well below expectations and possibly won’t be replaced.
Citroen will remain PSA’s generalist brand, but with fewer models. Initially, Tavares will only cut one car from the lineup by 2016, reducing the range to 14 models from 15, but in the long term Citroen’s range will be drastically cut, shrinking to seven models by 2022. By 2022, PSA’s two main brands will offer 26 models, down from 45 now. Citroen’s DS subbrand will be upgraded to a stand-alone marque with a lineup that will grow to seven models between 2016 and 2018 from five now, then stabilize at six vehicles by 2022.
Tavares said the rationalization of the model range will save PSA about 300 million euros a year and broaden its market coverage. Last year, PSA’s vehicles covered 60 percent of the market in Europe, China and Latin America, the company said. It plans to reach 67 percent coverage in the midterm. More importantly, a refocused range will let PSA in the midterm cover 69 percent of the European, Chinese and Latin American profit pool, up from the current 46 percent, Tavares said.
You can reach Luca Ciferri at firstname.lastname@example.org.