Citroen aims to pioneer 'pay-per-use' leasing scheme for C4 Cactus

Citroen plans to be the first automaker in Europe to offer a "pay-per-use" leasing scheme with the launch of the new C4 Cactus. The scheme mirrors plans offered by mobile phone operators.

"The pay-per-use scheme will include a monthly lease rate plus an additional payment that will vary according to the kilometers driven in the month," Citroen CEO Frederic Banzet said during a preview of the car last month. He declined to provide specific details, which will be revealed at the Geneva auto show on Tuesday.

Based on Banzet's description, though, the payment scheme would probably work like this: The customer would pay a monthly lease rate in the hundreds of euros, plus a monthly fee for a set number of kilometers driven. If the customer drives more than the set amount, the monthly pay-per-use rate increases. If the customer drives less than the set amount the pay-per-use rate decreases.

Either way, the monthly lease rate would remain the same.

This type of plan is not offered in Europe today. Instead, a leasing customer pays for additional kilometers at the end of the term, which is usually three years. That payment can be in the thousands of euros. With the pay-per-use scheme a customer would avoid that large payment at the end of the lease.

'All inclusive'

Citroen also plans to offer leasing customers a monthly flat rate that is "all inclusive," meaning that it covers the car's financing, insurance and maintenance, Citroen said. This type of program is already offered by some automakers in Europe.

The idea behind both plans is to help customers avoid exceeding their budgets, Citroen said. Market watchers believe it is a wise move. "Citroen is aligning to the current market evolution, offering distinctive and cost-conscious product features to match clients' preferences," said PwC analyst Giorgio Elefante. "We'll see more of it going forward, reshaping the role of OEMs in the automotive arena."

Another way that Citroen is trying to keep the customer's total cost of ownership down is with its Airbumps, which are exterior features that are supposed to protect the sides of the car and the bumpers from dents and other damage that can lead to expensive repairs.

Banzet is bullish on the future role of the C4 Cactus, which will lead Citroen's new C-line when it goes on sale in Europe in June. Citroen created the C-line for its volume models to better distinguish them from the brand's near-premium DS line, which debuted five years ago and now accounts for a quarter of the automaker's global sales.

The success of the DS models has overshadowed the other models in the Citroen lineup. Citroen's solution was to make the C-line distinctive in its own ways by offering bold exterior styling and a spacious interior.

The 965kg C4 Cactus, which will be sold alongside the C4 compact launched in 2011, offers fuel economy of 3.1 liters of gasoline per 100km, which results in 82 grams of CO2 per kilometer.