PARIS -- Citroen doesn't want to offer discounts on its latest model, the C4, so the French brand has launched the compact hatchback with a low base price that the carmaker says will leave little room for price reductions at dealerships.
The move marks a major change in strategy for Citroen, which has been one of the most aggressive discounters among Europe's volume brands.
Giving buyers price reductions hurts residual values, an important factor for fleet buyers, whom Citroen wants to attract for the C4. The discounting also lowered the brand's image among buyers, industry experts say.
Jean-Michel Marmiesse, product manager for the C4, said: “Automakers usually price new models on the high side when they are launched, but with the C4, the price is aggressive from the beginning in order to rapidly find a niche.”
He added: "The strategy is simple: to offer a model at an inexpensive price from the beginning to boost volumes.”
The C4's base retail price in France is 16,990 euros (about $23,310), compared with 16,390 euros for the Volkswagen Golf, 17,600 euros for the Ford Focus and 20,300 euros for the Renault Megane.
Although the Golf's starting price is slightly lower than the C4, Citroen claims the C4's price is competitive because it offers design features and technologies for a very competitive price.
The compact car segment is Europe's second-largest after subcompacts and is led by the Golf.
Industry watchers see potential risks in the brand's new strategy.
Citroen customers often expect to be able to bargain down prices at dealerships, said Carlos Da Silva, a market analyst at IHS Global Insight.
“You don't change customers' minds overnight,” Da Silva said. “So Citroen's sales force will have to be good at focusing customers on the product, its equipment, overall qualities, and anything that stands out from the crowd of competitors. Obviously they can do it if trained properly but still they will have to fight more than, say, a Volkswagen salesperson.”
Da Silva said Citroen needs to adopt its new pricing strategy to boost sales. “But it will be hard as the [compact] segment is one of the core segments in Europe and there is no reason competitors won't fight back.”
He added: “The brand is moving in the right direction, but you cannot expect customer habits and brand image to be transformed in a day.”
Citroen is introducing the second-generation C4 across Europe this month following its launch in France last month.
Technologies on the car include a lane-departure warning system, blind-spot monitoring, adaptive lighting and massaging seats.
The car comes with a choice of three gasoline engines co-developed with BMW and four diesel units. The most fuel-efficient diesel is coupled with stop-start technology to lower CO2 emissions to 109 grams per kilometer, which will be reduced to 99g/km on future models.