PSA Going Downmarket

Bertel Schmitt
by Bertel Schmitt
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psa going downmarket

Renault has made a big splash with their el-cheapo Dacia in the European market. In the first 4 months of this year, 17 percent of Renault’s sales came from Nicolae Ceausescu’s former auto works in Romania. France’s PSA doesn’t want to take it any longer, and now plans for their own low-cost line.

Their cheap car won’t come from low wage Eastern Europe, it will be made in PSA’s existing plant in Vigo, Spain, says Automobilwoche [sub]. Low cost cars don’t mean low investments: PSA will have to invest €1b into the plant to bring it up to speed. Making cheap cars that make money isn’t easy.

PSA seems to have big plans for the little cars: With a capacity of 384,000 units annually, Vigo is the largest of PSA’s plants, bigger than PSA’s lead plant in Sochaux, France (275.000 units.)

PSA is a little late to the game. The big sales successes for cheap cars in Europe were cause by scrapping bonuses. However, PSA plans on big sales in emerging markets.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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4 of 9 comments
  • Psarhjinian Psarhjinian on May 26, 2010

    I think we'll see a lot of this sort of thing over the next few years as the economies of the work "recalibrate". It's the 1980s all over again, skinny-leg jeans, large sunglasses, fluffy hair and de-contented econoboxes. A-ha just did their farewell tour, sadly. All of you who've been bemoaning the fact that we can't get cars like we used to get** are likely to get your chance. ** you know, like the Geo Metro, which everyone swears they'd buy if it were still available.

  • Coligny Coligny on May 27, 2010

    The Dacia limeup is thought from the start to be economical to build. Flatter windows-> cheaper to produce. The list goes on to everything. It's not an old plateform were the tooling can still be of some use. It's efficient shared plateform with specially designed flavored topping. It's a different process altogether to lower the cost of a formerly expensive (or somewhat expensive) car by putting shitty components. Than it is to design a car to be at the same time cheap and reliable. Beside, Renault and Dacia have been working together since the 60' not exactly newlywed discovering life together. As for the Logan... You can see her as a new Renault 8 / Renault 12 week end track car too. Not a massively overpowered poseur mobile like an RS4 who will just speed inside school zone to impress milfs, but more like a light cup car eagerly waiting to have some cheap fun a la "friend with benefit" .

  • Splateagle Splateagle on May 27, 2010
    A-ha just did their farewell tour, sadly Unless I fell asleep and missed the rest of 2010 no they haven't - December 4th 2010 in Oslo - you can still catch 'em ;) Back on topic De-contented boxes like the pre-bloat PSA Pug 206 might not be such a bad thing, as the B-segment has gained in girth over the past few years it's left a definite gap in the market for genuinely small small cars which *aren't* designed simply to be city runarounds.
  • Augie the Argie Augie the Argie on May 27, 2010

    I dislike this little cheap suckers, I'm glad the europeans are getting them after making fun of our cars in South America. They sell well because we have no other choice: e.g. Pug 206+, Renault Sandero/Logan, VW Gol, Fiat Palio, Chevy Classic/Sail, Brazilian Ford Ka. Gladly we still have modern offerings such as Citroen's C3 and Honda's Gen.II Fit.