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December 18, 2019 04:06 AM

Peugeot chief leads push to electrify, broaden brand's lineup

Luca Ciferri
Peter Sigal
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    Imparato said that the Peugeot 508 Sport Engineered sends the message that “we don’t want the future to be boring.”

    Peugeot, PSA Group's best-selling brand, is making a rapid transition toward electrification. Leading the way are the full-electric versions of the next generation of the 208 small hatchback and 2008 subcompact SUV, and plug-in hybrid versions of the 3008 compact SUV and 508 midsize fastback sedan. At the same time, Peugeot is broadening its lineup by adding a pickup truck and performance models. CEO Jean-Philippe Imparato spoke with Automotive News Europe Associate Publisher and Editor Luca Ciferri and Correspondent Peter Sigal about how the brand is changing.

    Peugeot showed the 508 Sport Engineered concept, a high-performance four-wheel-drive plug-in hybrid, at the Geneva auto show this year. What is the future of high-performance vehicles at Peugeot?

    The 508 Sport Engineered will be released next year, with orders opening in March, and the first one will be delivered in October 2020. There will be a sedan and a station wagon, as part of a line of high-performance vehicles. I think it will be a success, because the total cost of ownership (TCO) of this car -- with 360 hp, four-wheel drive and emissions of less than 50 grams of CO2 per kilometer -- will be only 300 euros a month more than the standard 508 plug-in hybrid. It will be the first Peugeot to have more than 300 hp. For us it's a way to send two messages: That we are ready technologically for the future, and also that we don't want the future to be boring.

    Will there still be a GTi range?

    No, this is our top level. This car is something I have been targeting for years, and I know that Jean-Marc Finot (the head of PSA Motorsport, which helped develop the 508 Sport Engineered) has been looking forward to it. That is because if you want to build a future in motor sports you have two constraints. First, it must be electrified, because no one will understand why, if the whole automobile market is switching to electric, that racing series aren't. And second, it must not be dependent on sponsors -- it needs to generate its own money. Developing and selling this type of car will create profits that will help support the racing team, like AMG does for Daimler, for example.

    Peugeot's E-Legend electric, autonomous coupe concept inspired by the 504 Coupe from the 1970s was also very well received. Could you build that?

    It was a great message for us, but to go into series production would cost us about 250 million euros. We decided that we needed to deal with the shift to electrification first. After that we will see if it's worth spending the money. But all the elements are in place to say, "yes."

    You have a very tightly focused lineup now, with SUVs and conventional variants in the small, compact and midsize segments. Will you be expanding it?

    In our global vision, in Europe we are focusing on electrifying the brand. But we need to increase our sales outside of Europe to better balance our regional mix. One thing we are doing is focusing on our light-commercial vehicle lineup, including our coming 1-ton pickup.

    The pickup is being developed with your joint venture partner in China, Dongfeng. What is the status of that project?

    We will launch the pickup next year. I don't know what kind of volumes it will generate. I'm very conservative about that, therefore, we aren't saying that we will take 5 percent of the 6 million worldwide pickup market. We are focusing on matching our competitors' features and reliability. The truck must be unstoppable. We won't launch it, however, until the global ecosystem, such as spare parts, is ready, because it must be able to be maintained anywhere in the world, for example in Africa.

    What is your regional revenue mix?

    In 2018, before we lost Iran [because of sanctions], we were at 50-50 Europe and rest of the world. Turkey and Argentina were down last year so we are now at 60-40 or 65-35. To protect my country mix, I need to be stronger in the maximum number of countries.

    How important is North America in building up revenue outside of Europe?

    We don't have any profit-loss effect at this point. We are preparing the project [targeting sales there by 2026]. Next year we can be more precise on what type of product we could have.

    Will the next 308 be on PSA's EMP2 platform for compact and midsize cars, and will it have an electric or plug-in hybrid option?

    Yes, it will be on the EMP2 platform. It will be a plug-in hybrid first, but could perhaps later have a full-electric drivetrain. Our compact and midsize cars will have plug-in hybrid drivetrains because it's a smoother way to switch from internal combustion to electric.

    What is your diesel mix today?

    It was 43 percent last year and we are at 41 percent now. Until Euro 7 emissions regulations come in, probably in 2024, we will let our customers choose their powertrain, whether it be gasoline, diesel or electric. After Euro 7, I think the diesel will die off, but if demand is still there, we will be there.

    The new 208, especially the electric version, is a very important car for Peugeot. What kind of order volume have you seen?

    We launched the car in October in France. We had 12,000 orders in just one country; 52 percent were in the upper two trim levels [for models with a traditional powertrain], and 12 percent were for the electric version. I'm targeting around 10 percent electric -- and those aren't pre-orders. They are real orders. I don't know what the global mix will be, but if we are around 4 percent to 5 percent electric in a country such as Italy, it will really help our emissions average in Europe. Something is clearly changing -- lots of customers are now asking for electric.

    How do electric vehicles fit into your revenue mix?

    First, the residual value of an e-208 is 2,500 euros more than an internal combustion one. That's because the energy mix of the market will be changing in the next several years. 

    Meet the boss

    Name: Jean-Philippe Imparato
    Title: Peugeot CEO
    Age: 53
    Main Challenge: Electrifying Peugeot’s lineup to help meet tougher EU emissions targets.


     

    What is the cost difference for buyers?

    In terms of total cost of ownership, in France it's 326 euros a month for both electric and internal combustion [the 100 hp gasoline version with an automatic transmission], because electricity is less expensive than fuel, and the maintenance costs are lower. We can make money on electric cars if the level of incentives for electric is consistent with the difference between electric and internal combustion. Right now in Europe, there are 6,000-euro [purchase] incentives in France, Germany and the Netherlands, for example. If that changes I will have to pull other levers, but I will never sell a car that loses money.

    Peugeot is also introducing an electric version of the new 2008 small SUV. Did you consider a plug-in hybrid instead?

    We considered that, but the usage of the 208 and 2008 are very similar. We have found that it's 70 percent urban driving.

    Peugeot is also rolling out plug-in hybrid versions of the 3008 compact SUV and the 508 midsize car early next year. What are your targets?

    I'm targeting 15 percent to 20 percent of total orders, based on a similar TCO between the plug-in hybrid and a 180-hp diesel with an automatic transmission. Those two versions will compete in the fleet market. Fleet managers are now building their budgets for next year. We are working with them, and we will see the fleet profile at the beginning of 2020, but I think it's credible to expect this level of mix.

    Peugeot still sells one minicar, the 108. What is the future of that segment?

    Emissions regulations have hit the segment hard, because the cost of compliance is disproportionately high. I can't leave the segment at the moment -- we want to be the best high-end volume brand --  but in the long term this segment will be 100 percent electric or disappear. That's my feeling.

    So technologies such as diesel could die by cost, not lack of demand?

    Perhaps. I'm in this industry because I love cars, but we could envision a world where we will be driven not by the customer but by regulation. Therefore, we have to adapt our offers to the situation.

    What is Peugeot's overall production level? Are you running at more than 100 percent of capacity?

    I'm running effectively above 100 percent, and with the first information about 208 orders, I think it will be the same in 2020. I'm very happy to be in this situation. If we have to build cars on nights and weekends, we will do so. We prefer to do that than to have overcapacity, because you always pay in that case. But, I'm not pushing to be over 100 percent. I don't allow countries to have more than 90 days of stock. I don't want dealers to have to push the metal.

    There are reports that inventories are up all over Europe. Are you seeing that?

    It will be a different situation at the end of December. [Because the EU fleet emissions target of 95g/km takes effect on Jan. 1, 2020], I think it will be the biggest December ever for sales. We have been preparing for this situation for months, monitoring every high-emissions car that is in stock or in the dealer network. If automakers don't register high-emissions cars before Jan. 1, they may have to pay fines. I don't know how other automakers will manage their operations, but we will be compliant in January. However, you will see us losing market share in October, November and December, then gaining share in January and February, just as we saw in August 2018 with WLTP certification.

    What is your forecast for the European market next year?

    Stable, but we will have a seasonal effect because of the emissions regulations in the first quarter. I'm not sure all the automakers are ready for them. Fleet emissions of CO2 will have to be 30g/km lower on Jan. 1 and the average now is 122g/km. So if you are not ready now in terms of product, production and stock management, you will be dead in January.

    AUTOMOTIVE NEWS EUROPE MONTHLY MAGAZINE

    This story is from Automotive News Europe's latest monthly magazine. To view the new issue, as well as past issues, click here.

     

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