PSA's DS brand comes out of Citroen's shadow

DS Automobiles was spun off from Citroen in 2014, but it took until 2018 before its first brand-specific model, the DS 7 Crossback compact SUV, went on sale. The smaller DS 3 Crossback, which will have an electric version of parent PSA Group's CMP architecture, was launched last year. Four more DS models are expected in the next four years. CEO Yves Bonnefont spoke with Automotive News Europe Correspondent Peter Sigal about how DS is forging its own identity as an upscale brand.

Bonnefont is moving to a new post at PSA to study potential synergies and cost savings across brands, PSA said on Jan. 15. Beatrice Foucher succeeds him as DS CEO.

DS is developing a midsize sedan. What are your goals for the car?

The logic of the DS range is very simple. We will introduce six cars [designed for DS], in segments that are both global and growing. While in Europe it might seem that large sedans are a thing of the past, it's not the same in other regions. The premium sedan segment is stable in China, for example. Even in Europe, there are still people who like the elegance of a nice sedan. Elegance is part of our DNA, so it makes sense for us to have a modern sedan in our range.

How are your two new SUVs, the DS 3 Crossback and DS 7 Crossback, doing against their competition?

It's been a year and a half since we launched the DS 7 Crossback, and the DS 3 Crossback is also out now, so it's a good time to check on where we are. While we don't want to manage the brand by volume, it's still good to be growing. It's solid growth because it's driven by three factors: product launches; new dealers, about two a week worldwide, so we are growing our geographic range; and we are also taking market share. The DS 7 Crossback has about a 20 percent segment share in France; it's No. 1 in the premium C SUV [compact] segment, ahead of the BMW X1 and Audi Q3. In the B SUV [small] premium [segment] we have a 50 percent share in France with the DS 3 Crossback. In Italy, we grew 36 percent in the second quarter in a premium market that was down 8.5 percent. In Benelux, we are up 35 percent in a premium market down 3.5 percent.

What is the timeline for the DS 3 Crossback E-Tense?

The first deliveries started at the end of 2019. Based on firm orders, we are predicting that we will see a mix of close to 10 percent. To be honest I thought demand would be lower. It might be that it's early adopters who are familiar with electric cars.

What is your sales strategy?

We try to show people the benefits of driving electric. For DS, electric is a high-end powertrain. The cars are a real pleasure to drive. You don't buy an electric car because you don't have a choice; you buy it because you are excited by the fact that it's electric. The second reason is that many of our customers live in the city center, and some cities are closing their centers to non-zero emissions cars. It's a future-proof car -- it will allow buyers to use it without restriction on their mobility. On top of that, the total cost of ownership is equivalent to that of a car with an internal combustion engine, but I think in the case of premium, it's not the No. 1 reason to buy.

Are your dealers excited about selling electric cars?

They need to train salespeople to explain the pros and cons of electric and provide the proper guidance so people get the cars they need. This is a huge transition for the dealers, so their first reaction is to say, "This is complicated." But, they understand why it's going that way, and they are getting excited now that they see the mix of orders.

The DS 7 Crossback plug-in hybrid is a real performance car but starting at 54,000 euros, it's expensive. How has the reaction been?

We are in the same range as the DS 3 Crossback E-Tense, about 10 percent of orders. Without any cars available for test drives, it's higher than we would have expected. We are in pre-series production, still adjusting software. I expect production will start in early 2020.

How do DS emissions fit into the larger picture for PSA Group?

There are two elements. [PSA CEO] Carlos Tavares has said we won't pay any emissions fines [in 2020-21], so we will be compliant. That is the economic element. There's a more fundamental element: We will not make a trade-off between emissions and economics. We will not tell our customers that we will pay emissions fines, even if we would be better off economically. It's our responsibility to be compliant with any emissions regulations, even if there is an option to pay for it. This is an ethical responsibility. Our entire range will be electrified from the beginning of 2020, and we will be a positive contributor to the group.

Your current lineup is nearly all SUVs. How is that market evolving in Europe?

What people like about SUVs is the high driving position. You dominate the road. You see more so you feel safer. But at the same time the main issue with SUVs is their CO2 emissions. It is not very efficient at high speed to have a high-riding car. You have a lot of aerodynamic resistance, which increases emissions and reduces the range of electric cars. We think cars will become lower. That is why we have introduced the Aero Sport Lounge concept. It's a next-generation SUV that is much lower and is optimized for aerodynamics.

DS sales have fallen sharply in China, and your joint venture with Changan will end. What is the future of DS there?

We would like to thank Changan for their support over the last eight years and take the opportunity to confirm that DS brand will continue its presence and development in China. We will deploy a new strategic approach for the benefit of our 75,000 customers and business partners, but we can't say more about the plan at this time.

What is the potential for DS outside of Europe and China?

We like to say that before you sell 10,000 cars you must sell 100. There is no such thing as a small market for us because we are a new brand. For example, we will soon cross the 1,000-vehicles-sold threshold in Japan, and we will go on from there. We do have priority markets, of course, and we are relentlessly pushing the brand there. Japan is one of them, South Korea is another attractive market. We are making inroads in Morocco and Turkey as well, even though conditions there are very difficult right now.

This year DS won both the constructors and driver's championships in Formula E with the DS Techeetah team. What does DS get from the series?

We are really proud to have won the double title this year. It says something about how committed we are to electrifying our lineup. We have put our money where our strategy is with Formula E. We get technical benefits, because the cars that win in Formula E are the most energy efficient, which is largely driven by software. Everything we do in Formula E with algorithms and software we try to replicate in series production. In the DS 3 Crossback E-Tense (battery-electric drivetrain), for example, about one-third of the range is provided by regenerative braking. That technology comes directly from Formula E. And software has no cost once it's developed so you can transfer it from racing to series production, which you can't do with hardware or sophisticated materials. We have a very good return on investment by all the measures we take.