PSA/Peugeot-Citroen had a strong first half but CEO Carlos Tavares is convinced that the good times at the once cash-strapped automaker have only just begun.
Next year Europe’s second-largest automaker after Volkswagen will start a product and technology offensive – led by a new family of compact crossovers and its first plug-in hybrids. Tavares believes the company’s model and powertrain expansion will help PSA counteract any negative effects from Russia’s sales slump and China’s slowdown. He shared his views with Automotive News Europe Editor Luca Ciferri.
Next year PSA will debut four models from its three brands in the fast-growing compact crossover segment. Which model will come first?
In 2016 we will start a product blitz that will last through 2020. We have a huge amount of new product coming out. It won’t be only a product offensive, but also a technology offensive, including gasoline plug-in hybrids and second-generation electric powertrains. I’m quite excited because from a product perspective the next few years will be really fun. In terms of crossovers, the concepts we showed are a good indication of the direction and the sequence of the first two products to appear.
The Peugeot Quartz [concept that appeared at the 2014 Paris auto show] is sharper, more rigor-oriented while the Citroen Aircross [concept unveiled at the 2015 Shanghai auto show] is more comfort- and feel-good oriented. It’s a different way to express crossovers and I’m happy that both are very attractive and very different. It will be the same with the one for DS.
China was PSA’s biggest growth driver last year and in the first half. What effect will the market’s slowdown have on your recovery?
Compared with the Western world, the motorization rate of China, which is below 100 cars per 1,000 people, shows there is still huge room for improvement. As China’s growth potential is there, we should not panic because we have a bump in the road or because we have a plateau. We may have some consolidation as well as more competition from the Chinese automakers, but we should not destroy the pricing power of our industry [through discounts and incentives].
Secondly, because we face a plateau and because in the last few years, if not decades, everybody was preparing for growth in China, it is obvious we will find huge potential for cost improvement. We should focus on efficiency, reducing costs, making sure that we protect the margins of our joint ventures in China and that we use the local supplier base more effectively.
Has discounting intensified in China?
Yes. We could have sold more had we increased discounts, which we didn’t. Even though our pricing power in China is not paramount, we try to keep ourselves reasonably steady against the other guys, but some automakers pulled pricing down by panicking and increasing incentives, which I don’t think is something that helps anybody.