Peugeot-Citroen’s plan for the reinvention of its marques

Peugeot Exalt concept

By 2022, PSA says it will be sharper, much leaner and making money

This morning Carlos Tavares, Peugeot-Citroen’s new CEO, revealed some unpleasant truths about the state of PSA’s car-making operation.

According to the 36 page ‘Back In The Race’ analyst’s briefing, PSA is making too many models, its research and development budgets are stretched to thinly, wage costs are too high, factories in Europe are underutilized and it needs to reduce the factory cost of its cars. None of which should be a huge surprise.

To my mind, the real killer for the company is the extent to which its products are discounted in the real world. In 2011 Peugeot says its transaction prices were 6.5 percent lower compared to the ‘best-in-class competitor’ – which I assume is VW. Even the DS brand – which PSA wants to see a proper premium competitor – sees transaction prices that are 12 percent adrift of the “European premium benchmark”.

So, here’s the plan for the company’s three marques. DS will become an ‘autonomous premium brand’ within PSA. It will get its own “dedicated product and marketing organization” and it will pursue “an aggressive development” in China. The core products will be a saloon and an SUV and six models overall, “targeting the premium profits pools”.

Perhaps the most intriguing part of the DS plan is that the brand will target “the 200 wealthiest cities worldwide”. It seems clear that global wealth is clearly flowing back into the cities, as anyone with experience of the London property market will attest.

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