The Truth About Cars » Peugeot http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sun, 03 Aug 2014 03:00:14 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Peugeot http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com European Review: Peugeot 208 GTi http://www.thetruthaboutcars.com/2014/07/european-review-peugeot-208-gti/ http://www.thetruthaboutcars.com/2014/07/european-review-peugeot-208-gti/#comments Wed, 30 Jul 2014 14:05:22 +0000 http://www.thetruthaboutcars.com/?p=875793   The Peugeot 205 GTI is one of the legends of hot hatch history. It took off where the original VW Golf GTI started, with sufficient space and practicality, lots of speed and a reasonable price. And it was even more fun to drive. With about 120 horsepower and weighing under a ton, it was […]

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The Peugeot 205 GTI is one of the legends of hot hatch history. It took off where the original VW Golf GTI started, with sufficient space and practicality, lots of speed and a reasonable price. And it was even more fun to drive. With about 120 horsepower and weighing under a ton, it was quite quick for 1980s, and its tail-happy attitude gave it the reputation of a challenging car to drive. Its fondness of going through the hedges backwards may helped its popularity – people like to think that they are better drivers than others, and driving a car notorious for unforgiving handling can thus be a great ego booster.

Now, after nearly three decades and a string of lackluster hot hatches in recent years, Peugeot wants to reignite the flame with the 208 GTi. It promises to be much more interesting and fun to drive than the fast versions of previous 206 and 207, but it also enters a market segment full of very competent rivals.

While the 205 was sleek and chic, the 208 is a bit fat and too complex in its design. But what modern car isn’t? Besides, the beauty is in the eye of the beholder, so you better just look at the pictures and decide for yourself.

The interior is a bit different matter. Here, the design is not just about beauty, but also about useability and ergonomics. We can ignore the mish-mash of shapes, colors and materials. It’s even not important that the nav screen looks like an afterthought (after all, the ones in modern Mercedes products are even worse). But there are a few things that need to be mentioned.

First, the steering wheel. I don’t know what’s wrong with the round ones, and this one is not only flat at the bottom, but is weirdly shaped overall. It’s strange to look at, and it’s awkward to hold – too thick, too small, too unevenly shaped. On the other hand, it’s good it’s so small, because with the strange placement of instrument cluster (very high up, like in cars with the mid-mounted instruments), the only way to get a good view of the instruments is to set it very low in your lap and look over it instead of through it. With the bigger wheel in the standard car, this must be a royal pain.

Second, there’s the gear knob. Much like with the steering wheel, someone probably tried too hard to make the driver feel like he’s driving an alien racing spaceship. Which may be the reason why gear knob looks like severed alien’s head. Made of metal. Which makes it rather unpleasant to hold under most circumstances, and almost impossible to hold when the car has been left in the sun.

But we’re not here to look around. We’re here to drive.

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First impressions: deep bucket seats are very good, with lots of comfort and lateral support. The controls are well placed, and most of all, very light. Only the gearshift has a whiff of mechanical clunkiness in it, but not too much – just enough for you to feel like you’re really driving a real machine.

The lightness of controls in a car like this may come as a bit of a surprise. Most hot hatches try quite hard to be as sporty as possible, with meaty steering and pedal feel, stiff suspension and intense sound. The 208 GTi does almost exact the opposite.

The first thing you notice is probably the sound, of lack of any. We know that the turbocharged 1.6 under the hood can sound pretty awesome – it’s the powerplant of choice for roaring, burbling and cracking, fire-spitting Mini Cooper S John Cooper Works after all. Even in Peugeot’s own RCZ, it at least sounds interesting from the inside, even though it’s more similar to a loud vacuum cleaner from the outside. But here, nothing. Just the vacuum cleaner. I think that has to be intentional, but we’ll get to that.

The next thing to notice is the lightness of the pedals. Here, it posses no problem at all for the sporting pretensions of the car. On the contrary, the light and quick-to-react accelerator makes heel’n’toe throttle blips incredibly easy. Just a touch of the gas pedal with the right edge of your shoe, and the revs shoot up.

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It’s when you reach the first corner at speed when you notice the biggest problem: the steering. While its lightness is totally in keeping with the lack of any sporty sound and featherlight pedal action, it may actually be the single biggest flaw of this vehicle. While the lightness itself wouldn’t pose a huge problem, the total and utter lack of feel does. Judging by the steering wheel reactions, you have no idea whether you have plenty of grip left, or whether your front wheels are ploughing out of the corner.

But this wouldn’t be such a great problem, if it weren’t for the GTi’s chassis balance. Like many other modern hot hatches, the 208 GTi makes full use of the fact that the mandatory ESP can correct the inherent unstable behaviour, and is set to be quite a bit tail-happy in the corners. It is a bit like the jet fighters are set up in a way that they wouldn’t even fly without a computer.

This is, by the way, one of the biggest things the electronic nannies brought to the “driving enthusiasts’” world – car makers are now not afraid of building a fun to drive, oversteery car, which would, had it not been for the ESP, make it all too easy for drivers to kill themselves, bringing negative press and expensive lawsuits along the way. As it is, you can turn the ESP off and have fun, and if you crash (like I did, with the Focus ST), it’s totally your fault for being stupid.

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In this case, though, the playfulness of the 208′s tiny French ass is a bit of a problem. With the absent steering feel, you constantly worry that you overshoot the steering input, sending your car ass-backwards into the ditch. And while this scenario will most likely never happen (I only managed to send the car into oversteer with especially harsh treatment on slightly wet track), it is enough to discourage you from exploring the car’s limits, or even going anywhere near them, on public road.

Is it a bad hot hatch, then? Not at all. While the 208 GTi is not a hardcore tiny sportscar like hot Mini Coopers or the previous generation Clio RS, it offers other things. It’s still mighty fast, but it also offers surprising ride quality. It resembles the old Peugeots of 1990s, like 306 or 406, with their fluid, stable, but not stiff suspensions. And with the ride quality and quite comfy seats added to the mix, the whole car starts to make sense.

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While most hot hatches chase after the “hardcore sportscar” ideal, with loud exhausts, beefy controls and harsh suspensions, the 208 GTi puts emphasis on the first two letters in its name. For those who need one practical car for little cash, this is a “poor man’s GT”. It can cover ground at a great rate of speed – in fact, I think it is as fast a car as you may ever need. It is quite comfortable and if need be, it can transport four adults. And it can even offer a bit of a driving fun from time to time, although not as much as the best competitors in its class.

I would call it an “adult’s hot hatch”. And it’s up to its potential buyers to decide whether that’s a good or bad thing.

@VojtaDobes is motoring journalist from Czech Republic, who previously worked for local editions of Autocar and TopGear magazines. Today, he runs his own website, www.Autickar.cz and serves as editor-in-chief at www.USmotors.cz. After a failed adventure with importing classic American cars to Europe, he is utterly broke, so he drives a borrowed Lincoln Town Car. His previous cars included a 1988 Caprice in NYC Taxi livery, a hot-rodded Opel Diplomat, two Dodge Coronets, a Simca, a Fiat 600 and Austin Maestro. He has never owned a diesel, manual wagon.

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PSA To Cut Labor Costs By Moving More Production Out Of France http://www.thetruthaboutcars.com/2014/05/psa-to-cut-labor-costs-by-moving-more-production-out-of-france/ http://www.thetruthaboutcars.com/2014/05/psa-to-cut-labor-costs-by-moving-more-production-out-of-france/#comments Fri, 23 May 2014 10:00:55 +0000 http://www.thetruthaboutcars.com/?p=828857 PSA will consolidate their small car production at a factory in Slovakia, as the struggling auto maker looks to cut labor costs and increase margins on small cars. Reuters and Automotive News Europe report that the next-generation Citroen C3, the brand’s best-selling model, will be built in Slovakia, alongside the C3 Picasso minivan and the […]

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PSA will consolidate their small car production at a factory in Slovakia, as the struggling auto maker looks to cut labor costs and increase margins on small cars.

Reuters and Automotive News Europe report that the next-generation Citroen C3, the brand’s best-selling model, will be built in Slovakia, alongside the C3 Picasso minivan and the Peugeot 208.

Although the 208 and C3 are currently built at PSA’s Poissy plant as well as in Slovakia, moving them eastward would allow PSA to slash their hourly wage costs, from 57 euros an hour in France, down to 15.50 euros in Slovakia. Lowering labor costs is critical for PSA, as it struggles to regain profitability and reap greater margins on their small cars, which are both unprofitable and PSA’s most popular cars.

Closing any French plant will be fraught with difficulty. Complex labor laws and cultural factors will make closing a plant a political nightmare for PSA – but the economics of Europe’s car market can no longer sustain it.

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PSA, Mitsubishi May End EV Partnership http://www.thetruthaboutcars.com/2014/05/psa-mitsubishi-may-end-ev-partnership/ http://www.thetruthaboutcars.com/2014/05/psa-mitsubishi-may-end-ev-partnership/#comments Thu, 22 May 2014 04:01:03 +0000 http://www.thetruthaboutcars.com/?p=828330 PSA and Mitsubishi may discontinue their electric vehicle partnership in the next 12 months, according to PSA CEO Carlos Tavares. Speaking to a government body related to economic affairs, Tavares said that PSA would be re-evaluating the arrangement, which has PSA selling the Mitsubishi i-MiEV under the Citroen and Peugeot brands. According to Reuters, sales […]

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PSA and Mitsubishi may discontinue their electric vehicle partnership in the next 12 months, according to PSA CEO Carlos Tavares.

Speaking to a government body related to economic affairs, Tavares said that PSA would be re-evaluating the arrangement, which has PSA selling the Mitsubishi i-MiEV under the Citroen and Peugeot brands.

According to Reuters, sales of the PSA branded EVs are down dramatically, from a combined 6,222 units in 2013 to 1106 in 2014. Despite this, Tavares cited the strength of the yen as a possible factor for the partnership’s fate.

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Dispatches Do Brasil: The 11th Hour http://www.thetruthaboutcars.com/2014/04/dispatches-do-brasil-the-11th-hour/ http://www.thetruthaboutcars.com/2014/04/dispatches-do-brasil-the-11th-hour/#comments Sun, 13 Apr 2014 14:53:13 +0000 http://www.thetruthaboutcars.com/?p=794658 The Chinese will be the first to lay eyes on Peugeot’s beautiful new concept car, the Exalt, at the Beijing Auto Show that starts later in the month. Along with great artistic touches inside and out, it’s also a hybrid that can run on gasoline, pure electricity or both. The Exalt is a sedan that […]

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The Chinese will be the first to lay eyes on Peugeot’s beautiful new concept car, the Exalt, at the Beijing Auto Show that starts later in the month. Along with great artistic touches inside and out, it’s also a hybrid that can run on gasoline, pure electricity or both. The Exalt is a sedan that anticipates Peugeot’s take on the sedan as a coupe -and it’s another example of a dying brand throwing a “hail mary” pass in the form of an attractive concept car.

The Exalt measures in at just 185 inches long, though it weighs about 3,700 lbs. Its sheetmetal mimics hand-hammered steel plates that were common in luxury cars, most especially French ones, in the 20s and 30s of the last century. There’s also special cloth that supposedly feels like shark skin covering the car’s back haunches.

Inside, Peugeot’s mastery of the beautiful comes completely to the fore. The artful finishing is a mix of ebony, a wool based textile and carbon fiber. Digital screens take the place of the instruments. There’s also a clever system that purifies the air, even when the car is not running.

The car is motivated by Peugeot’s highly regarded 1.6 THP turbo engine, which produces 270 hp in this version. There’s also an electric motor in the back. Put together, the ensemble puffs up the power to 340 hp. Unfortunately, but perhaps in tune with the times, the car is a full 6 speed automatic.

If Peugeot can extend any of these ideas to their production cars, I for one could see them becoming desirable cars again. The brand is slowly clawing their way back with cars like the 208 and 308 – which just won Europe’s Car of the Year award. But just as Citroen has the Cactus, Peugeot needs something like the Exalt to put them back in the imaginations of car buyers.

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Iran Is Open For Business: 1.5 Million Annual Unit Sales At Stake http://www.thetruthaboutcars.com/2013/11/iran-is-open-for-business-1-5-million-annual-unit-sales-at-stake/ http://www.thetruthaboutcars.com/2013/11/iran-is-open-for-business-1-5-million-annual-unit-sales-at-stake/#comments Tue, 26 Nov 2013 18:21:15 +0000 http://www.thetruthaboutcars.com/?p=664114 Weeks prior to the historic deal reached between Iran and the “P5+1″ group of nations, TTAC reported on some of the machinations going on behind the scenes regarded the United States, France and their respective auto industries ability to do business in Iran. We put forth the theory that any deal with Iran would be […]

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Weeks prior to the historic deal reached between Iran and the “P5+1″ group of nations, TTAC reported on some of the machinations going on behind the scenes regarded the United States, France and their respective auto industries ability to do business in Iran. We put forth the theory that any deal with Iran would be a boon to auto manufacturers, who would have access to a market expected to be worth 1.5 million units in a few short years, with a very young population and a standard of living that is substantially better than many highly touted emerging markets.

At the time of publication, we encountered significant dismissal, if not disagreement. But as it turned out, negotiations had been ongoing since the start of 2013, and the preliminary deal appears to make the auto industry a big winner.

Within the next 6 months, the auto industry is expected to inject as much as $500 million into Iran. The auto industry, currently worth over 1 million units annually, will be a hotly contested ground for foreign firms looking to break into the market.

Despite apparently being muscled out of Iran by their alliance with General Motors, PSA’s arrangement with GM is now as good as dead, and that means that PSA has the chance to claw their way back to the top of Iran’s market. Last year, PSA sold nearly 458,000 units in Iran (CKD kits which are being erroneously referred to as spare parts kits). Renault, which sold roughly 100,000 Logans in Iran last year, will also be able to resume business.

But American firms also appear to have designs on Iran’s auto market, with French firms becoming increasingly concerned that American companies are trying to muscle them out of Iran. Speaking to Just-Auto, an unnamed official from IKCO, PSA’s former partner in Iran, said

“This is a new day for automakers. More than [just] previous partners, we can also host more automakers which are interested to come to invest in the automotive sector of Iran.”

French officials have previously asserted that GM’s desire to have PSA end its relationship with IKCO was a way to clear out Iran’s auto market prior to the resumption of trade between the two countries. Indeed, the sanctions regime, as well as pressure from GM, caused Renault and PSA respectively, to withdraw from Iran – leaving a 585,000 unit hole in a 1.2 million unit marketplace.

Previous TTAC reports have outlined how GM officials have been clandestinely meeting with Iranian officials via intermediaries – at the time it appeared to be in violation of sanctions, but new information, asserting that high-level talks between the two countries had been going on since early 2013, have given those discussions some legitimacy.

But now, Iran is open for business not just for GM or any other American firm, but auto makers in Germany, Italy and beyond. The broader questions – whether the deal between Iran and the West is a good one, or whether it’s worth negotiating such a deal in return for the associated economic opportunities – are best left for another arena. What’s germane to our discussion is the future of Iran’s auto market and who stands to benefit.

A foothold, if not outright dominance, of a major emerging market is substantial prize for any automaker forced to compete in a mature global market with an over-saturation of brands and increasing need for volume and scale. Prior to the deal, auto makers were looking to Indonesia, South Africa  and other markets that are substantially poorer, with lesser prospects for growth. The BCG report on emerging markets even shied away from speculating on Iran due to political instability. But all of a sudden, Iran is now open for business, and by the end of the decade, its auto market is expected to be 50 percent larger than Australia’s. It’s unclear which auto makers will rush in to this market. But Iran appears to be wasting no time.

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Iran’s Imported Chevrolet Camaros Raise Questions About GM’s Dealings With PSA And The Iranian Regime http://www.thetruthaboutcars.com/2013/11/irans-imported-chevrolet-camaros-raise-questions-about-gms-dealings-with-psa-and-the-iranian-regime/ http://www.thetruthaboutcars.com/2013/11/irans-imported-chevrolet-camaros-raise-questions-about-gms-dealings-with-psa-and-the-iranian-regime/#comments Thu, 07 Nov 2013 14:26:41 +0000 http://www.thetruthaboutcars.com/?p=644722 An obscure story in the Azerbaijani press this past summer may be the tip of a much larger iceberg involving General Motors, PSA Peugeot Citroen and the Western World’s current bete noir: the Iranian regime currently embroiled at the heart of a controversial nuclear program, which is subject to economic sanctions by the United States government, […]

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An obscure story in the Azerbaijani press this past summer may be the tip of a much larger iceberg involving General Motors, PSA Peugeot Citroen and the Western World’s current bete noir: the Iranian regime currently embroiled at the heart of a controversial nuclear program, which is subject to economic sanctions by the United States government, including those that specifically target Iran’s automotive industry.

Citing reports from Iran’s Mehr news agency, an Azerbaijani news outlet reported that an unspecified number of brand new Chevrolet Camaro RS 2LT convertibles were imported by a division of Iranian conglomerate Iran Khodro. According to the report, the Camaros were sent from Miami to Paris, and then from Paris to Tehran via a Qatar Airways plane. The report also states that US Customs and Border Patrol documents list the final destination as the Aras Free Trade and Industrial Zone.

Iran Khodro, which manufactures automobiles in Iran, is among the Iranian industrial entities that has been hit hard by American sanctions against Iran, including those that specifically target its auto industry, which some parties allege is a “major procurement network that imports material and technologies used to build uranium centrifuges instead of cars.

Given the serious penalties for violating sanctions against Iran, it seems unthinkable at first glance that General Motors vehicles would be exported to Iran for sale without any consequences. GM even stipulated that PSA suspend doing business with Iran and IKCO as part of its alliance agreement with PSA, an agreement that seems to have stalled at this point. But a deeper dive into the matter reveals a much more complex picture, one that sheds more light on GM’s future positioning in emerging markets, its dealings with Iran itself, and what may be the true nature of its alliance with PSA.

The ties between PSA and IKCO have historically been very strong. Most of IKCO’s cars were Peugeot vehicles of varying ages, branded as Iran Khodro or Peugeot vehicles, and built in Iranian factories. In a market of 1.12 million units annually, IKCO had production capacity for a million units per year, with IKCO and PSA’s joint venture ruling the vast majority of those sales, while their factories ran very close to capacity in previous years. PSA alone accounted for roughly 458,000 units sold in Iran, while PSA rival Renault also had a strong interest in Iran, selling 100,000 units per year, until it withdrew from the country, citing fears of violating U.S sanctions as a reason for walking away from the Iranian market.

Now, various French news outlets, including Le Figaro, a respected daily newspaper, are accusing General Motors of intentionally gutting PSA’s ability to do business in Iran, while attempting to establish its own partnership with IKCO, as a means of securing a strong footing in the up and coming Iranian market, one that Boston Consulting Group estimates is good for 1.5 million units per year by 2020, making it one of the strongest of the “Beyond BRIC” countries.

Le Figario states that

Iranian automotive industry is particularly courted by General Motors . The giant came into contact with Iran Khodro, which worked until 2012 with Peugeot to produce 206 and 405 models that the French group has stopped delivering to Iran because of Western sanctions imposed on Tehran for its nuclear ambitions . “For at least six months as emissaries of General Motors go to Iran, they are no longer the simple identification of the market,” warns the industry, “but rather to the draft contract resumption of GM “, which was firmly established in the time of the Shah.

Le Figaro alleges that GM is not the only company to be looking to Iran if and when relations between America and Iran thaw amid a resolution over its nuclear crisis, but it does call out an ad campaign on behalf of GM undertaken by an Iranian law firm – other reports also point to a social media campaign designed to target Iranian consumers on behalf of GM. Other allegations leveled at GM include the use of emissaries on behalf of GM visiting Iran and IKCO as part of a broader push to undermine established French business interests in favor of American companies in preparation for the resumption of commercial dealings with Iran. One source cited by Le Figaro doesn’t think that this was a mere coincidence. The source claims that Executive Order 13645 is

“…a real cleansing of the Iranian car market as it prepares to make way for U.S. manufacturers before a political deal between Tehran and Washington.”

Upon closer examination, sale of the Camaros appears to be allowed under a loophole in Executive Order 13645 , which punishes any foreign entity that sells or supplies parts or services to Iran’s automotive industry (specifically its manufacturing sector) but does not prohibit supplying Iran with assembled vehicles.

During the initial stages of the tie-up, the alliance between GM and PSA was difficult to discern. Beyond vague platform sharing and purchasing agreements, there seemed to be few synergies that made such an alliance worthwhile. By the Iranian angle adds context to the entire affair.

By putting pressure on PSA to end its relationship with IKCO, GM gave America a way to keep the heat on Iran’s economy while also cutting off an artery for hard currency via reduced vehicle exports. At the same time, it was able to cripple an already ailing partner by cutting it off from one of its better export markets, and a growing one at that. Before the alliance had even been former, our own global sales reports showed that sanctions and other economic factors had been effective at gutting Iran’s automotive market, composed largely of locally built IKCO/PSA products. The departure of Renault was another positive development for GM, with the French auto maker walking away from 100,000 units annually. Altogether, the absence of the two French players leaves a 585,000 unit hole in Iran’s nearly 1 million strong auto market, one that GM is primed to capitalize on if and when things get less frosty and trade relations between the two countries open up .

Many observers feel that Iran’s Islamic regime is living on borrowed time, thanks to a relatively young population that is plugged into Western popular culture – these same people came very close to toppling the regime just a few years ago. And while regime change doesn’t seem to be in the cards anymore, then the very sanctions designed to bring the regime to its knees might at least foment some sort of normalization of relations in exchange for the forfeiture of Iran’s nuclear program, along with a new, more moderate ruler (though Iran’s unelected religious leaders still hold all the power). Such vast numbers of young people with rising economic prospects and families of their own on the horizon will be perfect consumers for a large number of automobiles in the future, and who better to serve them than General Motors?

The timing is likely to be fortuitous, as Iran’s auto market is expected to grow by another 500,000 units, to roughly 1.5 million units by the end of the decade. GM’s push won’t be centered around Camaros either. The General has a number of Chinese brands selling cheap, compact vehicles that can go head to head with Chinese brands like Great Wall that are already established in Iran. If GM really does make a big push into Iran, brands like Wuling and Baojun will be just as important as Chevrolet and Buick, and will likely be part of an attempt to capture a substantial amount of volume by utilizing multiple brands in GM’s portfolio to help capture various market segments from compact low-cost cars to flashier fare to the smaller commercial vehicles that brands like Wuling are known for.

Platform sharing, the oft reported cause of death of the GM-PSA alliance, may have been a red herring all along. GM could possibly have decided to abandon the alliance, or any pretense of it, after getting what they came for: in this case, an express pass to a promising emerging market that isn’t a BRIC country. But don’t count PSA out just yet. Recent talks with Chinese auto maker Dongfeng could allow it to get back in the game in Iran, free of any concerns about violating U.S. sanctions.

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Beyond The BRICs http://www.thetruthaboutcars.com/2013/10/beyond-the-brics/ http://www.thetruthaboutcars.com/2013/10/beyond-the-brics/#comments Wed, 23 Oct 2013 12:30:02 +0000 http://www.thetruthaboutcars.com/?p=632226 Emerging markets have been a big theme at TTAC for the past few years, with our coverage going beyond the cursory articles on automotive developments in the BRIC countries. Our articles on places like North Africa and Indonesia aren’t always the most popular, but we keep an eye on them for a very important reason. […]

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Emerging markets have been a big theme at TTAC for the past few years, with our coverage going beyond the cursory articles on automotive developments in the BRIC countries. Our articles on places like North Africa and Indonesia aren’t always the most popular, but we keep an eye on them for a very important reason. These countries are the final frontier for growth in the automotive sector.

Boston Consulting Group released a report that urges auto makers to look beyond the BRICs, to a group of 88 countries that contain roughly 40 percent of the world’s population. Collectively, annual growth of 6 percent is expected, below India’s 10 percent, but on par with China and outpacing both Brazil and Russia.

Rather than cover all 88 nations, BCG identified the “Future 15″ countries where car sales are expected to show strong increases in sales (Iran, Turkey, Saudi Arabia, the Ukraine, Indonesia, South Korea, Thailand, Malaysia, Taiwan, Mexico, Argentina, Colombia, Chile, South Africa and Algeria), as well as four regional areas that will serve not only as sales hot spots, but also as future locations for assembly plants, R&D and sourcing. Not surprisingly, these are based in North Africa, the ASEAN region, the Middle East and the Andean region in South America.

The need for specific regional strategies is a key theme in the report, with BCG devoting plenty of space to the need for product, financing and sourcing solutions that are best adapted to regional characteristics. Among their examples are the importance of offering a vehicle with a low tax burden in the Middle East, a tailor-made financing plan for Latin American consumers from Chevrolet and Renault’s North African assembly efforts for its Dacia brand.

One of the more interesting examples highlighted by the report was that of the ASEAN countries. Toyota is overwhelmingly dominant in Indonesia, its biggest market, and one possible reason is because of its ability to build products at an appropriate price-point that strongly resonate with local buyers. A side by side comparison between the Japanese market Sienta MPV and the Indonesian Avanza shows how this is done.

On the surface, the two seem indistinguishable, but under the skin, they are vastly different cars. The Sienta rides on a platform shared with the Yaris, while the Avanza uses a rugged, body-on-frame rear-drive layout with increased ground clearance, to handle Indonesia’s rougher roads and frequent flooding. Its powertrain and interior are much less advanced, and the Avanza has fewer creature comforts. But it’s built to a price, costing as much as $5,000 less than a Sienta, a fact that’s reflected in the slab-sided body panels, which are easier and cheaper to stamp. This kind of specialization is what’s allowed Toyota to capture 90 percent of Indonesia’s market, giving them an enormous head start in what is expected to be the next big place to sell cars.

ASEAN is not the only region where Toyota enjoys the top spot. The auto maker is leading slightly in volume in the Middle East, though second-place Kia is essentially equal in terms of market share. Chevrolet is regarded as the leader in the Andean belt, while Renault and Dacia are tops in North Africa. While Korean OEMs also have a strong showing, both Renault and Peugeot are strong in the Middle East and Africa, even as their efforts falter in Europe.

The common thread with all of this is an emerging middle class in regions where that notion did not exist. With prosperity on the rise, they are eager to attain greater mobility and freedom though an automobile of their own. Along with personal transportation comes the possibility of good jobs in assembly plants, sales and after-sales, logistics and other related industries. Renault and Dacia have begun to look to North Africa as a regional hub not only for the African market, but for the Middle East and even Europe. Nissan’s Datsun brand is one of the first to explicit target the “Beyond BRIC” countries, with stated aims to expand into Indonesia and Africa in the near future.

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PSA, Dongfeng Said To Be Exploring A Partnership http://www.thetruthaboutcars.com/2013/09/psa-dongfeng-said-to-be-exploring-a-partnership/ http://www.thetruthaboutcars.com/2013/09/psa-dongfeng-said-to-be-exploring-a-partnership/#comments Wed, 18 Sep 2013 17:22:07 +0000 http://www.thetruthaboutcars.com/?p=523009 PSA, parent company of Peugeot and Citroen, is said to be exploring a partnership with China’s Dongfeng, as Peugeot looks for ways to strengthen itself amid weak sales and a perpetually sputtering European car market. A number of solutions are being proposed, with France’s La Tribune claiming that a capital increase (with Dongfeng providing cash in exchange […]

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PSA, parent company of Peugeot and Citroen, is said to be exploring a partnership with China’s Dongfeng, as Peugeot looks for ways to strengthen itself amid weak sales and a perpetually sputtering European car market.

A number of solutions are being proposed, with France’s La Tribune claiming that a capital increase (with Dongfeng providing cash in exchange for equity), as well as an emerging market joint venture where Dongfeng would also be holding much of the equity, with Peugeot getting the financial resources it needs to expand in the developing world.

Complicating matters is the brand’s alliance with General Motors. GM has a 7 percent stake in PSA and is seen within the company as a key to helping PSA pull through the European crisis, where overcapacity and a need for significant economies of scale are hurting smaller players like PSA. But PSA also wants to follow the lead of rival Renault-Nissan, which has aggressively expanded in emerging markets with Dacia (a runaway success) and now Datsun. Europe is considered a mature market, and emerging markets are one of the only growth sectors left for an established auto maker like PSA (especially given that a North American expansion is off the table, even though it is also a strong market for automobiles).

Currently, the Peugeot family holds roughly 25 percent of PSA’s shares, but any deal with Dongfeng could see them lose their stake – an unthinkable occurrence in past eras.

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PSA Peugeot Citroen Wins EU Approval For 7 Billion Euro Loan From French Government http://www.thetruthaboutcars.com/2013/07/psa-peugeot-citroen-wins-eu-approval-for-7-billion-euro-loan-from-french-government/ http://www.thetruthaboutcars.com/2013/07/psa-peugeot-citroen-wins-eu-approval-for-7-billion-euro-loan-from-french-government/#comments Wed, 31 Jul 2013 12:00:07 +0000 http://www.thetruthaboutcars.com/?p=497532 Europe’s second biggest automaker, PSA Peugeot Citroen, has gotten approval from the European Union for the French government to guarantee $9.28 billion (7 billion Euros) in bonds to provide Banque PSA Finance, the car maker’s finance arm, with funds so they can sell cars on credit at competitive interest rates. “We have arrived at a […]

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Europe’s second biggest automaker, PSA Peugeot Citroen, has gotten approval from the European Union for the French government to guarantee $9.28 billion (7 billion Euros) in bonds to provide Banque PSA Finance, the car maker’s finance arm, with funds so they can sell cars on credit at competitive interest rates.

“We have arrived at a formula which allows PSA to restructure in accordance with clear limits, reducing to a minimum the damaging effects for competitors who have not received support from public funding,” said Joaquin Almunia, EU Competition Commissioner, in a written statement. “This is a balanced result which offers the PSA group the chance to make a new start on a sound basis.”

The bonds helps Peugeot keep down borrowing costs, a vital ingredient in offering loans competitive with the financing deals offered by companies like Volkswagen, Europe’s biggest automaker.

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Junkyard Find: 1989 Peugeot 405 S http://www.thetruthaboutcars.com/2013/07/junkyard-find-1989-peugeot-405-s/ http://www.thetruthaboutcars.com/2013/07/junkyard-find-1989-peugeot-405-s/#comments Sat, 13 Jul 2013 13:00:15 +0000 http://www.thetruthaboutcars.com/?p=494968 Peugeot gave up on the North American market after the 1991 model year, thanks to poor sales of their new 405. I haven’t seen one of these cars on the street for at least 15 years, and junkyard sightings have been correspondingly rare. When I spotted this car at a Northern California self-serve yard a […]

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11 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee MartinPeugeot gave up on the North American market after the 1991 model year, thanks to poor sales of their new 405. I haven’t seen one of these cars on the street for at least 15 years, and junkyard sightings have been correspondingly rare. When I spotted this car at a Northern California self-serve yard a couple months back, it took me a moment to figure out what it was.
03 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee MartinNearly 200,000 miles on the clock, which is comparable to what I see on (non-Mitsubishi) Japanese cars of the same era.
02 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee MartinWhen the company that built your car retreats from your continent, keeping it on the street becomes quite a challenge. This one made it to age 24.
10 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee MartinThe only Peugeot I’ve ever owned was a 504 that came with a bunch of Linda Ronstadt 8-tracks. I liked that car, in spite of its frequent breakdowns (yes, I know, the 504 is supposedly bulletproof everywhere else in the world).

We have a few Peugeot 405 Mi16s racing in the 24 Hours of LeMons (they’re quite affordable, i.e. less than scrap value in most cases). They’re somewhat quick, but they tend to be pretty blow-uppy. Here’s one depositing a connecting rod in the windshield of a following car.

01 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 02 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 03 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 04 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 05 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 06 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 07 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 08 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 09 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 10 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 11 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 12 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin 13 - 1989 Peugeot 405 Down On the Junkyard - Picture courtesy of Murilee Martin

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PSA, GM Discussing A Return For Peugeot And Citroen Products In The USA http://www.thetruthaboutcars.com/2013/07/psa-gm-discussing-a-return-for-peugeot-and-citroen-products-in-the-usa/ http://www.thetruthaboutcars.com/2013/07/psa-gm-discussing-a-return-for-peugeot-and-citroen-products-in-the-usa/#comments Wed, 10 Jul 2013 13:50:10 +0000 http://www.thetruthaboutcars.com/?p=494756 No, the headline is not just empty click-bait. According to La Tribune, GM and PSA are looking at bringing some current Peugeot and Citroen products to America. The only catch is that they’d be commercial vans. The Citroen Jumpy and Peugeot Expert, the two vans in question, are currently built in a joint venture with Fiat due […]

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No, the headline is not just empty click-bait. According to La TribuneGM and PSA are looking at bringing some current Peugeot and Citroen products to America. The only catch is that they’d be commercial vans.

The Citroen Jumpy and Peugeot Expert, the two vans in question, are currently built in a joint venture with Fiat due to expire in 2017. PSA is looking for a replacement solution, and with GM currently buying vans from Nissan (their NV vans are going to be sold as Chevrolets), it would be advantageous for GM to take advantage of their alliance with PSA and get something out of the deal.

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Peugeot Working On 1700 LB Hot Hatch Good For 135 MPG http://www.thetruthaboutcars.com/2013/07/peugeot-working-on-1700-lb-hot-hatch-good-for-135-mpg/ http://www.thetruthaboutcars.com/2013/07/peugeot-working-on-1700-lb-hot-hatch-good-for-135-mpg/#comments Fri, 05 Jul 2013 15:27:13 +0000 http://www.thetruthaboutcars.com/?p=494284 Still glowing from their win at Pikes Peak, Peugeot is about to show off something completely different; a 135 mpg B-segment car (on the European cycle) that can still break the automotive Mendoza Line and hit 60 mph in 8 seconds. The 208 FE as its known, is a pretty radical car compared to a […]

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peugeot_208_fe_rear_static_0. Photo courtesy AutoExpress.co.uk

Still glowing from their win at Pikes Peak, Peugeot is about to show off something completely different; a 135 mpg B-segment car (on the European cycle) that can still break the automotive Mendoza Line and hit 60 mph in 8 seconds.

The 208 FE as its known, is a pretty radical car compared to a base 208; Peugeot took a 1.0L 208 (0-60 time of 14 seconds in standard trim) and replaced most of the bodywork with aerodynamically enhanced carbon fiber panels. Also helping to save weight and space are a 5 gallon fuel tank (compared to the standard car’s 13 gallon unit) and a carbon “blade” which replaces the springs, shocks and anti-roll bars both front and rear. All told, this cuts 440 pounds out of the car, bringing weigh down to 1705 pounds. Even the brakes have been uprated to solid caliper Alcon units solely to allow for less effort when slowing the car down.

On the powertrain front, the stock 1.0L engine gets a bump up to 1.2L – horsepower hasn’t been disclosed, but the concept car made 68 horsepower. Not very much, but considering the car’s weight, as well as the 40 pony boost from the on-board hybrid system (from the Peugeot 908 HDi LeMans car), the car has a pure electric range of between 9 to 12 miles. Power is routed through a 5 speed automated manual gearbox.

The end result is 135 continental mpgs and just half the CO2 emissions of a Prius (a mere 49 grams per kilometer). Peugeot won’t be putting this car into production, but the one-off example will be driveable. From a technological standpoint, there’s a lot to like about this car; a lightweight “warm hatch” that has decent performance but astounding fuel economy. Even with all of the modern hybrid and carbon fiber tech onboard, the 208 FE probably delivers similar numbers to something like a Peugeot 205 GTI (said to hit 60 mph in 7.6 seconds) while being exponentially more efficient. Does it deliver the same purity behind the wheel? I doubt it. But that’s not its mission either. The 208 FE is an interesting exercise in building an extremely fuel efficient car that isn’t a rolling advertisement for one’s proclivity to shop at a food co-op. Based on that alone, I wouldn’t kick it out of bed for eating wheat germ crackers.

peugeot_208_fe_rear_suspension peugeot_208_fe_brakes peugeot_208_fe_interior peugeot_208_fe_rear_static_0. Photo courtesy AutoExpress.co.uk peugeot_208_fe_front_static

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Sebastian Loeb Shatters Pikes Peak Record, Gives PSA Something To Celebrate http://www.thetruthaboutcars.com/2013/07/sebastian-loeb-shatters-pikes-peak-record-gives-psa-something-to-celebrate/ http://www.thetruthaboutcars.com/2013/07/sebastian-loeb-shatters-pikes-peak-record-gives-psa-something-to-celebrate/#comments Tue, 02 Jul 2013 18:18:07 +0000 http://www.thetruthaboutcars.com/?p=493967 It’s been a bad week for PSA, but at least they’ve got something to celebrate about. French driver Sebastian Loeb, behind the wheel of a Peugeot 208 T16, broke the record for the fastest time up Pikes Peak, at 8 minutes, 13.878 seconds, beating the old record by 92.286 seconds. The 208 T16, which bears […]

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Sébastien-Loeb-and-Peugeot-Shatter-Record-at-Pikes-Peak-placement-626x382. Photo courtesy CarandDriver.comIt’s been a bad week for PSA, but at least they’ve got something to celebrate about. French driver Sebastian Loeb, behind the wheel of a Peugeot 208 T16, broke the record for the fastest time up Pikes Peak, at 8 minutes, 13.878 seconds, beating the old record by 92.286 seconds.

The 208 T16, which bears no mechanical resemblance to the 208 road car, pushes 875 horsepower through all four wheels. Peugeot is no stranger to Pikes Peak – nearly a quarter century ago, a Ari Vatanen attacked the mountain in a 405 T16. Loeb, who has traditionally driven Citroen cars in WRC, has leapfrogged over Vatanen to cement himself as one of the legends of the course. Dare I say he may even be the most complete driver of all time? Somewhere, Ken Block is plotting a way to steal the limelight back from Loeb.

 

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Peugeot Family Willing To Relinquish Control Of PSA To GM http://www.thetruthaboutcars.com/2013/06/peugeot-family-willing-to-relinquish-control-of-psa-to-gm/ http://www.thetruthaboutcars.com/2013/06/peugeot-family-willing-to-relinquish-control-of-psa-to-gm/#comments Thu, 27 Jun 2013 15:35:11 +0000 http://www.thetruthaboutcars.com/?p=493438 Mired in the same overcapacity crisis as the rest of Europe’s auto makers, the founding family of PSA is reportedly willing to give up control of the company that owns Peugeot and Citroen in exchange for a fresh infusion of capital from GM, which currently owns 7 percent of PSA. Terms of the deal are […]

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Mired in the same overcapacity crisis as the rest of Europe’s auto makers, the founding family of PSA is reportedly willing to give up control of the company that owns Peugeot and Citroen in exchange for a fresh infusion of capital from GM, which currently owns 7 percent of PSA.

Terms of the deal are unclear, but PSA is sustaining heavy losses as European car sales have tanked. Unlike arch rival Renault, PSA has no low cost cars to help attract emerging market consumers and value-oriented buyers in Europe.

The Peugeot family still holds a 25 percent stake in the company and retains roughly 38 percent of the voting rights. But the family is reportedly comfortable with the idea of giving up control, according to a Reuters source

“GM faces the same overcapacity situation with Opel, and that’s why PSA is trying to convince them to merge the two,” said one of the people, who asked not to be identified because the talks are confidential. “The Peugeot family has now accepted that they’ll lose control, so this is no longer an issue.”

The news outlet reports that nothing concrete would happen until after September’s German elections. Any deal with Peugeot would undoubtedly result in major job losses and factory closures in France, Germany or another European country, which makes any tie-up extremely politically sensitive. But given the prospect of GM absorbing yet another ailing European brand, deep cuts will be an inevitable part of the consolidation of PSA.

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Peugeot Does The Climb Dance Once Again http://www.thetruthaboutcars.com/2013/04/peugeot-does-the-climb-dance-once-again/ http://www.thetruthaboutcars.com/2013/04/peugeot-does-the-climb-dance-once-again/#comments Tue, 16 Apr 2013 16:00:18 +0000 http://www.thetruthaboutcars.com/?p=485089 A quarter of a century ago, Ari Vanaten attacked Pikes Peak in the legendary Peugeot 405 T16, and the resulting footage of the attempt led to the renowned documentary “Climb Dance”.  For 2013, Peugeot will be back at Pikes Peak with the appropriately named 208 T16. Piloting the 208 T16 will be WRC ace Sebastian […]

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A quarter of a century ago, Ari Vanaten attacked Pikes Peak in the legendary Peugeot 405 T16, and the resulting footage of the attempt led to the renowned documentary “Climb Dance”.  For 2013, Peugeot will be back at Pikes Peak with the appropriately named 208 T16. Piloting the 208 T16 will be WRC ace Sebastian Loeb, which should make the 208 T16 a formidable contender on that basis alone.

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The Most Important French Car Of The Decade Is A Minivan http://www.thetruthaboutcars.com/2013/04/citroen-c4-picasso/ http://www.thetruthaboutcars.com/2013/04/citroen-c4-picasso/#comments Tue, 02 Apr 2013 12:00:33 +0000 http://www.thetruthaboutcars.com/?p=483308 The MPV segment, so popular in Europe, was basically invented by the French. The Renault Espace, the grandfather of the modern minivan, was originally supposed to be a Peugeot, until PSA deemed it too expensive and sold it to Renault. Nearly two decades later, Renault disrupted the segment again with their compact Scenic minivan, which […]

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The MPV segment, so popular in Europe, was basically invented by the French. The Renault Espace, the grandfather of the modern minivan, was originally supposed to be a Peugeot, until PSA deemed it too expensive and sold it to Renault. Nearly two decades later, Renault disrupted the segment again with their compact Scenic minivan, which spawned imitators from nearly every single brand.

Citroen’s newest MPV, the C4 Picasso, is a massively important car for PSA and the French car industry. It’s not as sexy as the Renaultsport or Alpine products coming down the pipeline, nor does it have the enthusiast-weirdo cachet of previous PSA products. But this car will be one of the products that determines PSA’s future. Having missed the boat on making a push in the low-cost segment, the C4 and the Peugeot 208 will define the next generation of PSA products, as the two brands attempt a convoluted re-positioning in the marketplace.

The Picasso is the first car to ride on PSA’s new EMP2 modular architecture. The Picasso will be chock full of PSA’s latest tech, from blind spot cameras to massive touchscreens to adaptive cruise control. New diesel powertrains will offer in excess of 70 mpg on the European cycle and C02 emissions on par with a Toyota Prius; not hugely exciting, but if you ever hail a cab in Paris, you’ll probably be riding in one of these.

PSA desperately needs to C4 to succeed. As the test best for their next generation architecture, the future of PSA hangs in the balance. Strong sales will mean a whole new generation of EMP2 based vehicles. Failure could entail another bailout or worse.

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PSA’s Brand Strategy: Let’s Make A Peugeot Sandwich http://www.thetruthaboutcars.com/2013/03/psas-brand-strategy-lets-make-a-peugeot-sandwich/ http://www.thetruthaboutcars.com/2013/03/psas-brand-strategy-lets-make-a-peugeot-sandwich/#comments Thu, 14 Mar 2013 14:35:06 +0000 http://www.thetruthaboutcars.com/?p=481070 PSA announced their renewed brand strategy for their Peugeot and Citroen lines, and the situation has finally been clarified after frequent back and forth reports that contradicted one another. It turns out that PSA will employ a three-tier approach that is equally confusing, with Citroen as the lowest tier with Peugeot on top. But then […]

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PSA announced their renewed brand strategy for their Peugeot and Citroen lines, and the situation has finally been clarified after frequent back and forth reports that contradicted one another. It turns out that PSA will employ a three-tier approach that is equally confusing, with Citroen as the lowest tier with Peugeot on top. But then there’s also Citroen’s DS line, which is supposed to be upscale itself. Confused? So are we.

A hand cheat sheet provided by PSA to Automotive News Europe outlines the “values” supposedly embodied by both Citroen and Peugeot.

PSA CEO Philippe Varin recently outlined the new product strategies for Peugeot and Citroen like this:
Citroen stands for:
Fuel-efficient and environmentally friendly cars
Easy-to-use, less sophisticated technology
Purist design
Peugeot stands for:
Perceived quality and reliability
Elegant, dynamic designs that stand out from the crowd 
Innovative driving experience and driving pleasure

PSA was adamant that Citroen was not going to become a low-cost brand, but the next generation of vehicles will be positioned slightly lower than the current range. Does that mean the Hydramatic suspension, one of the brand’s hallmarks, will be gone? Let’s hope not. What will be happening is that Citroen vehicles will be positioned as “cheap premium” (whatever that means), with Peugeot being “premium” and to top it all off, Citroen’s DS line will be positioned as an even more premium range relative to Peugeot, if Automotive News has it right, which is difficult to ascertain, since PSA seems to change its positioning depending on what day of the week it is.

Further complicating matters is Peugeot’s schizophrenic offerings, including the low-cost 301 sedan which will be sold in emerging markets as a premium vehicle relative to the other low-cost competitors, if you buy into PSA’s spin. It’s a tough one to swallow, considering that Renault has poured so much time and effort into Dacia for the precise reason that the low-cost and premium brands should not mix.

Keen French car observers will also note that the brand values espoused here are backwards. Traditionally, Citroen had the elegant, dynamic designs and wild new technologies, while Peugeots were rugged and simple enough to endear themselves to the pied-noirs of Africa. Outside of France and Africa, Peugeot’s profile is basically nil – if the Citroen C6′s poor sales were an indication of how poorly premium French cars were received  then the Peugeot 607 large sedan may have been the only offering to fare even worse, ending up largely in the hands of cab drivers.

The most succinct analysis of it all comes from Fitch Ratings, which noted

“We believe this strategy makes sense overall but carries substantial execution risk and could take many years to bear fruit. 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.”

 

 

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PSA Wants GM To Pitch In On Compressed Air Hybrid http://www.thetruthaboutcars.com/2013/03/psa-wants-gm-to-pitch-in-on-compressed-air-hybrid/ http://www.thetruthaboutcars.com/2013/03/psa-wants-gm-to-pitch-in-on-compressed-air-hybrid/#comments Fri, 08 Mar 2013 08:31:16 +0000 http://www.thetruthaboutcars.com/?p=480526 Last month, we suggested that PSA’s new compressed air hybrid system was a good way for PSA to drum up some investment into its ailing new car business. Now comes word that PSA wants to talk to other car makers, including alliance partner General Motors, about pooling the R&D cost of the new tech. Given […]

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Last month, we suggested that PSA’s new compressed air hybrid system was a good way for PSA to drum up some investment into its ailing new car business. Now comes word that PSA wants to talk to other car makers, including alliance partner General Motors, about pooling the R&D cost of the new tech.

Given that PSA spent an estimated $4 billion on R&D in 2011, the $650 million cost to develop the new technology is a relatively modest sum. Yet PSA is still looking for a partner (or partners) to help bear the burden. PSA is looking to get cars using the technology, dubbed HybridAir, on the road by 2016, a very short timeframe for a new technology, especially one as radical as this.

PSA is also looking for a partner for the technology in China. Meanwhile, GM issued a statement claiming that the new hybrid system “is not part of the alliance discussions”. Bosch, which has assisted PSA with the initial development of HybridAir, previously warned of “unspecified technical challenges” with the system, throwing further doubt on the viability of the technology as a real automotive solution. Evidently, it doesn’t seem to be doing much to bring some badly needed money in either.

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The End Of The French Car http://www.thetruthaboutcars.com/2013/03/the-end-of-the-french-car/ http://www.thetruthaboutcars.com/2013/03/the-end-of-the-french-car/#comments Thu, 07 Mar 2013 14:30:04 +0000 http://www.thetruthaboutcars.com/?p=480430 A bit of light reading for everyone wishing they were in Geneva, munching on some pain au chocolat while paying $8 for a Nespresso. CAR magazine contributor Stephen Bayley has a very entertaining essay entitled “The End of the French Car“, in which he laments the demise of the quirky, compact French automobile. Bayley’s thesis is that once […]

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A bit of light reading for everyone wishing they were in Geneva, munching on some pain au chocolat while paying $8 for a Nespresso. CAR magazine contributor Stephen Bayley has a very entertaining essay entitled “The End of the French Car“, in which he laments the demise of the quirky, compact French automobile.

Bayley’s thesis is that once France lost it’s cultural capital, the cars began their inevitable decline

When did the decline start ?  Back in those first paragraph student days, I could sit on a train for thirty-six hours to Madrid and have for company only my French philosophers and the latest copy of Auto Journal with all its fabulous news of new French cars with oleo-pneumatic suspension and strange seating arrangements.  Who can say whether it was cause or effect, but when French culture as a whole lost its authority, the cars became boring.  Who reads Sartre today ?  Exactly.

Sure, the death of the Citroen C6 was a bit of a turning point; the large French luxury sedan with superb ride quality and great design (and admittedly, not much else) had finally lost any relevance in the wider marketplace. But I’m not so sure that it’s time to bury French cars for good.

The Renault 4 and Citroen 2CV that Bayley venerates are no longer with us, but in their place, we have the Dacia. Not as quirky or memorable, sure, but designed to fulfill the same promise of cheap transportation for those who may not have been able to afford a new car. The Peugeot 205 GTI may be dead, but just around the corner, there is a Peugeot 208 Hybrid with a two-cylinder engine that will hit 60 mph in about 8 seconds (roughly the same as a 205 GTI, maybe a bit quicker, depending on who you ask) and weighs a couple hundred pounds less than the 205.  If anything, the demise of French cars won’t come from a lack of competent product, but market forces that have little to do with the cars themselves.

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Small SUVs The Lone Bright Spot In Europe http://www.thetruthaboutcars.com/2013/03/small-suvs-the-lone-bright-spot-in-europe/ http://www.thetruthaboutcars.com/2013/03/small-suvs-the-lone-bright-spot-in-europe/#comments Thu, 07 Mar 2013 12:42:39 +0000 http://www.thetruthaboutcars.com/?p=480422 An invasive species originating in North America is threatening the native fauna of Europe in a big way. Small crossovers, largely based on B and C segment hatchbacks, are one of the few growth segments in Europe’s ailing auto industry, so much so that they could even help reverse the fortunes of a couple ailing […]

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An invasive species originating in North America is threatening the native fauna of Europe in a big way. Small crossovers, largely based on B and C segment hatchbacks, are one of the few growth segments in Europe’s ailing auto industry, so much so that they could even help reverse the fortunes of a couple ailing auto makers.

Peugeot and Renault, two car makers that have struggled in recent years, are expected to post big sales volumes of their upcoming small crossovers. One forecasting house predicts that the Renault Captur and Peugeot 2008 will even bump the current segment leader, the Nissan Juke, down to third place. Meanwhile, Ford is counting on the upcoming EcoSport for both volume and margin, thanks to its assembly in India.

By 2016, the segment is set to grow to 550,000 vehicles, up from just under 300,000 in 2012. The vehicles will be very profitable for auto makers, as they can charge a $3,900 premium on average for a car that uses the same basic B or C segment underpinnings. Furthermore, traditional market leaders like VW, Toyota, Honda and Hyundai are largely devoid of any product in these segments, giving PSA, Renault, Ford and even GM a wide berth to capture market share in this segment.

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France Hikes Taxes On Diesel Fuel, Auto Makers Protest http://www.thetruthaboutcars.com/2013/02/france-hikes-taxes-on-diesel-fuel-auto-makers-protest/ http://www.thetruthaboutcars.com/2013/02/france-hikes-taxes-on-diesel-fuel-auto-makers-protest/#comments Thu, 28 Feb 2013 16:53:19 +0000 http://www.thetruthaboutcars.com/?p=479448 The French government is planning on raising taxes on diesel fuel, branding it a “health issue”, much to the chagrin of consumers and the country’s auto industry. France’s environment minister, Delphine Bartho, told French radio (via Bloomberg) that a study by the WHO showed that diesel fumes presented a significant health hazard, and the French […]

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The French government is planning on raising taxes on diesel fuel, branding it a “health issue”, much to the chagrin of consumers and the country’s auto industry.

France’s environment minister, Delphine Bartho, told French radio (via Bloomberg) that a study by the WHO showed that diesel fumes presented a significant health hazard, and the French government would move to raise taxes on the fuel to help soften demand.

“It’s inescapable,” Batho told RMC radio today when asked whether lower taxes paid on diesel compared with gasoline should be eliminated. “I am favorable. It’s a public health issue.”

Currently, diesel is about 20 cents cheaper per liter than gasoline, but France’s new tax regimen would bring diesel costs in line with gasoline. Originally, diesel was taxed at a favorable rate due to its use in farm equipment and heavy-duty vehicles, but the lower cost led to a massive shift towards diesel powered passenger cars. 73 percent of cars sold in France last year came with a diesel engine, compared to 55 percent on average in Western Europe.

Renault and PSA have been less than enthused with the new tax hikes. PSA is one of the world’s largest producers of diesel engines, and had criticized the studies cited by the French government, with PSA’s Director of R&D, William Faury, stating that they ignored modern particulate-filter diesel engines in favor of old-style engines.

The problem is not the diesel engines on sale now, but the pre-filter era diesels. Current Euro 5 standards for diesel engines are exceedingly tough, and PSA already has diesel powered models capable of emitting a Prius-like 100 grams of CO2 per km. PSA’s aggregate CO2 emissions level for its fleet of cars is already the lowest in Europe, at 122.5 grams per kilometer, just ahead of Toyota. And thanks to the upcoming Euro 6 emissions standards, that number should fall, as diesel NOx emissions are required to be aligned with those of gasoline engines.

While the government may be genuinely concerned about the health of its citizens, it’s hard not to see this as another cynical political calculation, similar to the now shelved plans for extremely high tax rates on France’s top earners. A hallmark of ineffective government is the use of dramatic, headline grabbing solutions, which are little more than PR stunts and rarely mistaken for solid governance. Despite the posturing of France’s current administration. A La Tribune columnist noted that the Environment minister herself admitted that diesel engines from a decade prior are the real problem, since they can emit as much as 30 times more pollution than the current crop of diesels.

To add to the matter, both PSA and Renault are in a precarious position. TTAC readers will know that the French government has been marshaled to help provide de facto bailouts to PSA and quell the ongoing labor disputes between the French auto makers and the myriad of unions entrenched in their factories. With Europe’s new car market already hanging by a thread, the diesel tax comes at a particularly bad time for France’s domestic auto industry.

 

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Renault, PSA Face Unprofitable Paradox http://www.thetruthaboutcars.com/2013/02/renault-psa-face-unprofitable-paradox/ http://www.thetruthaboutcars.com/2013/02/renault-psa-face-unprofitable-paradox/#comments Wed, 20 Feb 2013 17:16:51 +0000 http://www.thetruthaboutcars.com/?p=478171 Prevailing wisdom today holds that small cars, manufactured in developed economies are some of the least profitable cars in existence. So why do companies like Peugeot, Citroen and Renault persist in producing them? In article in La Tribune (France’s leading business paper) explains why. Once upon a time, when Giscard d’Estaing ruled and the Fifth Republic […]

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Prevailing wisdom today holds that small cars, manufactured in developed economies are some of the least profitable cars in existence. So why do companies like Peugeot, Citroen and Renault persist in producing them?

In article in La Tribune (France’s leading business paper) explains why. Once upon a time, when Giscard d’Estaing ruled and the Fifth Republic was just being digested after a spicy summer of 1968, France decided to tax big cars, in the name of Libertéégalité, fraternité. Since the biggest market for French cars was France, Renault, Citroen and Peugeot decided to switch to producing small cars – the Citroen SM was a footnote, rather than a mainstay of France’s auto industry, despite what the buff books tell us.

Up until recently, things were tries bien. Renault, for example, sold nearly half a millio Clio and Twingo models in 2012 alone. Not bad for a company that mostly plays in Europe, but these cars are also not so profitable. Renault is able to produce these cars in Turkey and Slovenia respectively (with some Clio production still kept in France) which takes away some of the sting.

Over at PSA, things are much more dire. Small cars (B and C segment, for clarification’s sake) make up about 45 percent of their sales, but a good chunk of them are built in France. Workers there earn 35 euros an hour, compared to 22 in Spain and just 10 per hour in Slovakia. PSA’s CEO told La Tribune that a new Peugeot 208 built in Slovakia would save an astonishing 700 euros per car, along with the contentious labor negotiations that go hand in hand with French organized labor. At Renault, the cost difference is even more staggering, with 1300 euros saved on the Clio when it’s built in Turkey. Any surprise that since 2005, both companies have cut their domestic production in half? The strong social safety net and egalitarian society designed to protect the workers has ultimately resulted in a contribution to their declining fortunes.

Ironically, the small car segment, for all the talk about shrinking profits, is growing in France. Registrations have continuously increased since 2007, from 45 percent of all cars to 53 percent in 2012. But the only way for car companies to make any money is to wither away domestic production in favor of the Dacia approach; old technology, no frills packaging and ultra-low cost production in developing economies. So far, only Renault has this capability. PSA is trying it’s hand at the Fiat and Mini approach, positioning Peugeot and the Citroen DS line as “premium” small cars, in the hopes of squeezing some more margin from their products. Given the increasing stratification in the European car market (where only the high and low ends can make any money) it is a risky approach. But not everyone wants to drive a Dacia, and not everyone can afford a Benz.

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Peugeot Adds Lightness With 1700 LB Supermini http://www.thetruthaboutcars.com/2013/02/peugeot-adds-lightness-with-1700-lb-supermini/ http://www.thetruthaboutcars.com/2013/02/peugeot-adds-lightness-with-1700-lb-supermini/#comments Tue, 19 Feb 2013 17:52:44 +0000 http://www.thetruthaboutcars.com/?p=478154 What would you say to a hybrid B-segment car that weighed 1700 lbs, emitted half the carbon emissions of a Toyota Prius and still hit 62 mph in 8 seconds? In a couple weeks time, Peugeot will debut a new version of their 208 subcompact, dubbed the HybridFE. The starting point is a base 208 […]

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What would you say to a hybrid B-segment car that weighed 1700 lbs, emitted half the carbon emissions of a Toyota Prius and still hit 62 mph in 8 seconds?

In a couple weeks time, Peugeot will debut a new version of their 208 subcompact, dubbed the HybridFE. The starting point is a base 208 with a lethargic 1.0L 3-cylinder engine making 68 horsepower. With a 14 second 0-60 time, one could read an entire Foucault book on the construct of the sociosexual panopticon and still just hit 58 mph.

But Peugeot, channeling Chapman, has ripped out 440 lbs from the car, bringing its curb weight down to about 1700 lbs, from the base car’s 2150 lbs. A hybrid system, an automated manual gearbox, low-rolling resistance tires and a special aerodynamics package have been added to help increase efficiency and aerodynamic properties.

The end result is still a 68 horsepower 208, but one capable of a very respectable 8-second sprint to 62 mph, while emitting just 49g/km of CO2 – about half of what a Toyota Prius emits. For comparison, vehicles than emit less than 100 grams are eligible for exemption from the London congestion charge, since they are considered low emissions.

The one caveat here is that Peugeot hasn’t released any pictures so far. Nevertheless, it’s nice to see that light weight engineering is far from dead. It’s certainly more realistic than their compressed-air hybrid system.

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PSA Still Burning Cash, Banque PSA Downgraded To Junk http://www.thetruthaboutcars.com/2013/02/psa-still-burning-cash-banque-psa-downgraded-to-junk/ http://www.thetruthaboutcars.com/2013/02/psa-still-burning-cash-banque-psa-downgraded-to-junk/#comments Fri, 15 Feb 2013 19:11:08 +0000 http://www.thetruthaboutcars.com/?p=477753 Despite a plan for a financial turnaround by 2015, PSA projected a cash burn rate as much as 1.5 billion euros  for 2013. Meanwhile, PSA’s finance arm had their bonds downgraded to junk status. The downgrading of Banque PSA’s bonds by Standard & Poor’s is yet another blow for the French automaker, which reported record […]

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Despite a plan for a financial turnaround by 2015, PSA projected a cash burn rate as much as 1.5 billion euros  for 2013. Meanwhile, PSA’s finance arm had their bonds downgraded to junk status.

The downgrading of Banque PSA’s bonds by Standard & Poor’s is yet another blow for the French automaker, which reported record losses this week. One positive development for PSA was a labor agreement with workers at the troubled Aulnay plant, which allowed PSA to start winding down production ahead of schedule.

Meanwhile, French paper La Tribune shed some more light on PSA’s new brand strategy going forward. Initial reports suggested that Peugeot would move upscale, with Citroen remaining in its current place, but La Tribune now claims that

Citroën and should move at least partially to models simpler, more affordable, while its DS range must occupy the high ground. Peugeot remains in place somewhere between the two

We’ll have the story straight as soon as possible. But as Jimmy Buffet famously said, it’s 5 o’clock somewhere, and in France, the work day is definitely over right now.

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Peugeot To Move “Upscale”, PSA Remains Without Low-Cost Brand http://www.thetruthaboutcars.com/2013/02/peugeot-to-move-upscale-psa-remains-without-low-cost-brand/ http://www.thetruthaboutcars.com/2013/02/peugeot-to-move-upscale-psa-remains-without-low-cost-brand/#comments Thu, 14 Feb 2013 13:30:30 +0000 http://www.thetruthaboutcars.com/?p=477467 Stop us if you’ve heard this one before. Unlike the poorly interpreted plans for Mazda to be a “premium” brand, PSA really is planning to take Peugeot upscale, despite having zero brand equity, an upscale Citroen line and zero exposure to the profit center of the future, low-cost cars. The announcement came as PSA announced a record […]

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Stop us if you’ve heard this one before. Unlike the poorly interpreted plans for Mazda to be a “premium” brand, PSA really is planning to take Peugeot upscale, despite having zero brand equity, an upscale Citroen line and zero exposure to the profit center of the future, low-cost cars.

The announcement came as PSA announced a record $6.7 billion loss for 2012, compared with a $588 million profit in 2011. PSA also laid out its plans for a recovery, including the baffling upscale move for the quality-plagued Peugeot brand.

Automotive News reported on the developments, quoting PSA CEO Philippe Varin

“The Peugeot brand will move toward a more modern image,” led by the 208 subcompact’s high-performance GTI version and the new 2008 SUV-styled crossover, Varin said. “In 2013, the positioning of our brands will be supported by a very rich range of products and 17 vehicle launches,” he said.

Despite being fetishized by North American euro-philes, Peugeot is on the cusp of irrelevancy in the European car market. While they have had some success with their B and C-segment offerings, the market for D-segment and above sedans has been moribund since Mitterand was in the Élysée Palace, serving mostly as minicabs in third-rate British towns and transportation for the bad guys in Ronin. The notion of Peugeot as a premium brand is laughable, and complicated even further by their intra-group rival Citroen.

At the turn of the decade, Citroen launched their DS line of premium hatchbacks, models which won critical acclaim but have still yet to set the sales charts on fire (the DS5, above, is the ride of choice for France’s Prime Minister). That will leave PSA with two brands which are aspiring to play in the premium segment, but without any sort of strategy for a low-cost brand to be sold both in Europe and developing markets – a strategy that has helped Renault-Nissan reap fat margins even in the current lean times. Unbelievably  this strategy is a central tenet of PSA’s recovery plan, which was demanded in exchange for government help for its financing unit.

Among the other stipulations include targeting for 50 percent of its vehicles to be sold outside Europe by 2015 (a tough one, in light of having no low-cost product to sell in developing markets), doubling production volumes via its alliance with GM, and achieving a 13 percent market share in a market that PSA assumes will hold at 2012 levels of car sales. In the words of one Credit Suisse analyst “Both look unlikely now”. Given that the writing is on the wall for a continued decline in European new car sales it’s impossible to fathom how PSA could present these plans with a straight face.

But for a company like PSA, 2015 is a long way away. Let’s see if they make it through 2013 without becoming partially state owned, and then take it from there.

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