Automotive News Europe - March 2013 - 14

AUTOMOTIVE NEWS EUROPE

AUTOMAKERS

Growing apart
PSA launches new brand strategy for Peugeot and Citroen
BERTRAND GAY

autonewseurope@crain.com

ARIS – PSA/Peugeot-Citroen aims
to shift the positioning of its two
brands further apart, although analysts
are skeptical of the move.
Peugeot and Citroen cars chase a very
similar customer base, which has been
a problem for the French automaker for
a long time. Presenting the automaker’s
2012 financial results last month, CEO
Philippe Varin admitted: “Our brands
are too close.”
In the future, Peugeot and Citroen will
target two different customer groups,
he said, while at the same time they will
target what he called “profit pools.”
The Peugeot brand will move more upmarket and aim to appeal to customers
who want a traditional type of car. The
208 subcompact’s high-performance
GTi version and the new 2008 SUVstyled crossover are examples of how
Peugeot can win higher profit margins
per sale, Varin said.
Citroen will expand the brand’s upscale
DS line to earn bigger profits while
mainstream Citroen models from the
C1 to C5, the so-called C-line models,
will be positioned slightly lower than
the current cars. This means PSA has
ditched its earlier, three-level strategy
for Citroen to have DS, C and Entry
models by merging the latter two.

Varin said Citroen will not become a
low-cost brand while PSA brands boss
Frederic Saint-Geours said the new
positioning for Citroen’s C-line models
was decided back in 2009. Asked on the
sidelines of the financial results press
conference whether the new Citroens will
be as profitable as the current cars, SaintGeours said: “There is no reason they
should be less profitable for PSA.”
He declined to say whether Citroen cars
will compete against models from Ford
or Opel at the higher end of the volume
segments or lower down with Skoda
and Hyundai. “Our brand positioning is
a new thinking, so we cannot refer to
existing cars,” he said.
Cars such as the recently launched CElysee sedan highlight what analysts have
dubbed Citroen’s new “cheap premium”
brand positioning. The new C4 Picasso
minivan will be another. The Technospace
concept that debuts at the Geneva auto
show previews the new minivan.
C-line Citroen models will offer a better
cost of ownership and an optimized
cost-to-function ratio, Varin said. They
will have easy-to-use and practical technology while offering less mechanical
refinement or raw power.
Peugeot will fill the slot between the DS
sub-brand and the Citroen C-line models. The Peugeot 301, a sister model to
the Citroen C-Elysee and similarly created as an affordable sedan for emerging markets, does not run counter to
Peugeot’s upscale move

Peugeot expects to earn higher margins by selling near-premium models
such as the 208 GTi.

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Peugeot stands for:
w Perceived quality and reliability
w Elegant, dynamic designs that
stand out from the crowd
w Innovative driving experience and
driving pleasure
Citroen stands for:
w Fuel-efficient and environmentally
friendly cars
w Easy-to-use, less sophisticated
technology
w Purist design

because it is a premium offering in the
markets it serves when compared with
rivals, PSA says.

Enough time?
Analysts wonder whether PSA has the
time it needs to carry through the new
strategy in a European market that is
likely to be down for years to come.
Another problem is that PSA’s competitors are also pushing upscale, so the
competition will be tough.
“We believe this strategy makes sense
overall but carries substantial execution
risk and could take many years to bear
fruit,” Fitch Ratings said in a statement on Feb. 25. “In particular, we are
concerned that the existence of both
entry-level/basic models and aspiring higher-end products within the two
brands will not be easily understood
and accepted by customers.”
Bernstein Research said in a note to investors: “This may be the right thing to
do for the long-run, but we don’t need
to quote John Maynard Keynes to know
this may be academic if PSA runs out
of liquidity and these products never
get launched.”

MARCH 2013

http://www.autonewseurope.com

Automotive News Europe - March 2013

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