EDITOR'S NOTE: PSA has 17,000 employees in China. A previous version of this interview that appeared in the Automotive News Europe daily newsletter on June 22 misstated the headcount.
PSA/Peugeot-Citroen has never been a big global player. But Europe's second-biggest automaker after Volkswagen is aiming to change that by generating half its sales outside Europe by 2015. PSA brands boss Jean-Marc Gales explains the automaker's strategy for ascending the global ranking, helped by growth in booming markets such as China and Brazil, while also moving the Peugeot and Citroen brands upscale and launching a new mid-sized car for first-time buyers in developing countries. Gales spoke with Automotive News Europe Editor-in-Chief Harald Hamprecht.
What are PSA's biggest challenges?
For starters, globalization. We must benefit from growth in China, the world's largest auto market, as quickly as possible. In 2010, PSA had a market share of just 3.3 percent together with our partner Dongfeng. We want to get to 5 percent as early as 2015 and to 8 percent in 2020.
But all automakers want to grow in China.
Yes, but we are bringing out a new model every year on average. We have also signed a second joint venture with Changan, to build light commercial vehicles and models from the Citroen DS line in China, initially the Citroen DS5 and DS4. In the medium term, China will certainly be our largest sales market, even ahead of France, where we sold about 870,000 vehicles in 2010. In China, the figure was 370,000, and is growing.
What are your short-term plans for China?
This year, we want to get to 450,000 units in China. But if the market grows to 20 million units per year, we will be at least 1.6 million units with an 8 percent market share.
What other markets do you want to attack?
Latin America! We have had losses there for years. Our goal is to be profitable there for the first time. In the medium term, we want to climb from 5.4 percent to 8 percent (in market share). Overall, we want to reduce our dependence on Europe, thanks to markets like China, Brazil and even Russia. At the same time, we want to keep our market share in Europe above 14 percent and possibly increase it, provided, naturally, that this growth takes place profitably.
And what you planning in Europe?
We also want to keep our market share in Europe above 14 percent and possibly increase it, provided, naturally, that this growth takes place profitably.
How vigorously do you want to grow outside of Europe?
Last year, we sold 39 percent of our global volume outside of Europe. By 2015, we want to have increased this share to 50 percent. That would give us a solid ratio. But the issue of globalization is not my sole challenge.
What are the other challenges?
We want to expand our competitive advantage on the issues of CO2 emissions and fuel consumption. For 2012, we have resolved to sell more than 1 million vehicles that emit less than 120 grams of CO2 per km. Last year, the figure was 720,000 Peugeots and Citroens. We want to roll out start-stop right across our entire model lineup, and save up to 15 percent in fuel per model. The new C4 has started things off. By 2013, we want to sell 1 million vehicles equipped with this technology. This year, we are bringing out a diesel hybrid drive in the Peugeot 3008 and the Citroen DS5 -- the world's first diesel hybrid. And with the Peugeot i0n and Citroen C-Zero, we are the first European manufacturers to have electric models on the market.
The iOn and C-Zero are rebadged versions of the Mitsubishi i-MiEV.
No, you can't look at it that way. We undertook the European adaptation for our partner Mitsubishi, achieved four stars in the EuroNCAP rating, and greatly increased perceived quality in the interior.
How many iOn and C-Zero units will you sell?
This year, we want to sell 3,800 units per brand. By 2015, we want to cumulatively have 100,000 units from each brand in the market, with three electric models per brand starting in 2013. But the market for electric cars has its limits, just like state subsidies. In France, EV buyers get a 5,000 euro subsidy; in Germany, nothing at all. And by 2020, we expect the EV share in the overall market to be no more than 3 to 5 percent. So we continue to focus strongly on our diesel and gasoline engines. Looking at the overall emissions balance sheet, an electric car in Germany, taking into account where the power is sourced, emits 90 grams of CO2 per km. With a good diesel or gasoline engine, we will soon be achieving that as well, but at considerably less expense for us and for the customer.
Will there be any exciting powertrain developements?
In the coming year, we'll introduce a three-cylinder gasoline engine that emits less than 100 grams of CO2 per kilometer. This 1.0- and 1.2-liter powertrain will go into the new Peugeot 207, for example.
What are you investing in r&d?
Last year, r&d represented 5 percent of revenues. We will keep this constant in 2011. Even in times of crisis, we haven't deviated from this reasonable level.
Last year, PSA sold 3.6 million vehicles worldwide. What are your plans for 2012 and for the mid term?
It will certainly be more this year when we will celebrate a new all-time high. And the new record will be significantly more than that of the previous year.
Where does PSA want to be in terms of global ranking in the mid-term and long term?
In 2010, PSA was in seventh place in the global ranking, one spot higher than in the year before. Peugeot was No. 9 and Citroen was No. 13. We want to be in seventh place with just Peugeot by 2015. Peugeot will grow more strongly internationally than Citroen because we are giving Peugeot precedence in markets such as India and Iran, where we aren't even introducing Citroen. In contrast, Citroen is stronger in China.
PSA plans to build 200,000 cars a year in Shenzen with Changan including Citroen cars and a new low-cost brand. What's behind these plans?
We want to produce cars under a new brand there to cover the entry-level segment of the Chinese market. The brand only applies to China, and we don't plan to introduce it in Europe.
How will you sharpen the differentiation between Peugeot and Citroen?
Peugeot has the clear market values of trust, passion and inspiration, which we will expand to give customers a unique combination of performance and emotional appeal. That's really why Motion and Emotion is the marketing claim that we originated in 2010.
PSA had a poor reputation for quality in the past. How are you changing that?
In the next generation at the latest, our vehicles will be level with Volkswagen in perceived quality. In the area of product quality, the Peugeot 508 is quite close to the VW Passat even today. We also see this in residual values for the 508, which are significantly above those of the Peugeot 407.
Will you reduce your product lineup further?
No, the deletion of the Peugeot 1007 in 2009 was the final elimination in our portfolio for now. Instead we are expanding our portfolio.
What new models are planned?
In 2012, we will bring out a new SUV based on the Mitsubishi ASX to serve this growing segment. The new model is positioned directly against the Toyota RAV4. But above all, 2012 will be the year of the new Peugeot 207. It's the starting shot for our new design language. In addition, we will again bring out a GT version. We will also bring more derivatives of the 508 to the market.
What are your plans for Citroen DS upscale line?
This is the year of the DS4 and the DS5. Both models are locomotives for our image. Next year we will have a full year of production for the DS3, DS4 and DS5. We will expand the line further next year with a convertible version of the DS3. I am not excluding a sportier version of the DS4, similar to the DS3 Racing. I can also imagine a DS2 as a new entry-level model, as well as a DS6 as a new flagship. This would be a sedan similar to our Metropolis concept car. But a decision on this hasn't been made yet.
How do you intend to further expand the DS line?
I can imagine a DS2 as a new entry-level model as well as a DS6 as a new flagship, therefore a sedan similar to our Metropolis concept car. But a decision on this hasn't been made yet. We're still in the concept phase. We're already having fun with the DS line today.
In what way?
For the DS3, we are achieving an average price of 21,000 euros. That's 5,000 euros more than for the C3. Last year, we sold 64,000 DS3 units. This year it will be 80,000. We intend to sell 40,000 units of the DS4 and 50,000 of the DS5. For 2012, we are assuming sales of 170,000 to 180,000 DS models.
Are you planning any more industrial partnerships?
No, we will go into greater depth with our partners Mitsubishi, BMW or Toyota rather than seek out new partners. Incidentally, we have produced 1.8 million engines with BMW since 2006.
Are changes planned in your dealer network?
Globally, we currently have more than 20,000 dealers, and this number will sharply rise within the framework of our globalization in the medium term. In Europe, we certainly won't be expanding our network. In Germany and France, we do have a few blank spots on the map. But qualitative improvements are more important than the quantitative expansion of the network. With our Podium 2012 program, we have resolved to take one of the top three spots among the volume makers by next year for customer satisfaction. To do that, we are now training 60,000 people in Europe, concentrating on 11 standards. It is seven times more expensive to gain a new customer than to keep an existing customer.
What are your loyalty rates?
They average 45 percent in Europe, but VW's are at 55 percent and we want to be there. A sales potential amounting to several tens of thousands a year comes from that.
Do you need more factories?
We are building a new factory in Kaluga, Russia, with a capacity of 125,000 units a year. We're looking for a location for a new factory that we could expand for exports. In China, we have already announced our plans involving Changan. It involves a second joint venture with plans for exports. And we could increase output with Dongfeng to 800,000 units in the next five years, and then operate the largest PSA factory in the world there.
Will you keep all your factories in Europe?
We need all our factories in Europe and we will improve their utilization. In 2008, our utilization was at 81 percent. In 2012 we're planning on an improvement to 105 percent in two- (or three-) shift operation. That's because Europe is our home market and will always remain an important market.
When will the European market really pick up again?
In 2011, we only expect the level of 2010, about 15 million vehicles for our European 30 markets. Long term, I expect a slight increase. And in 2020, the market should be at 18 million units.
Will you boost your global headcount beyond 198,000?
In China alone we have 17,000 employees, of which 11,000 work for our joint venture with Dongfeng. We will significantly expand our employment outside of Europe to support our development in new markets. We are also hiring in Europe, with 4,000 new jobs in France this year, for example.
Your Mu car-sharing program is a new business field.
We want to take on the role of pioneer in this regard and become a mobility provider. That's because Peugeot is the only automotive brand that also sells bicycles and scooters. We already have 10,000 registered customers for Mu Europewide. The number of cities where we offer this car-sharing concept will climb from the current 14 to 80 by the end of the year.
What is Citroen doing in this area?
We will roll out the Multi City project. It is basically an online trip configurator that computes an affordable trip for you, right up to the hotel. This concept rounds out the Peugeot Mu concept. PSA ultimately wants to develop an edge through service and innovation.