By on February 14, 2013

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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20 Comments on “Peugeot To Move “Upscale”, PSA Remains Without Low-Cost Brand...”

  • avatar

    That hot hatch in the pic would make a great entry level Lincoln. Make the 240 hp Ecoboost the primary engine and wallah Mk whatever.

    • 0 avatar

      It’s not so much a hot hatch as a hot-station wagon/crossover. It’s not really classifiable.

      Well…. importing Citroens to the United States would certainly put a new meaning in the term “Lincoln Continental.”

      Actually I would be curious to see how it would go, it would certainly be a relatively low cost way to completely redefine the Lincoln brand. My instincts would say that this would be a disaster but it would certainly be worth a shot, seeing as it cant get much worse for lincoln anyway….

      Not that there is a chance in a million of it happening, but hey one can dream…

      • 0 avatar

        PSA should have bought Saturn during the crisis but was worried the US market would never recover. At that point they had the cash and were in the position to take Saturn in the Euro direction already begun by GM. They could have quickly added their other brands to dealer lots.

        I don’t know why PSA can’t ink an additional partnership deal with GM and sell here in the US. Many Buick/GMC dealers now have space with Pontiac gone. They could use Chevy lots like they did with Geo. The partnership could mimic GMs deals in China and use GM NA plants. It’s clear GM wants PSA but is waiting for the French gov to deal with debt and capacity issues at which point there will be a PSA/Opel fusion. PSA has no other choice because they have no other channel to sell in China or the US.
        Personally, I think PSA has great potential and might be a good investment.

    • 0 avatar

      Citroen should not have a Lincoln middleman but market directly in America. If they do it right, they could compete with Audi, BMW and Mercedes.

  • avatar

    Where exactly did he say he wants to move Peugeot upscale? All he said was that they intend to launch two new products which will be good for Peugeot’s image. Does that mean Toyota wants to move upscale too because they launched a sports car (GT86) and a new crossover (RAV4)?

  • avatar

    Argh! I love Peugeots and Citroens. They’re fine cars, but they’ve muddied their differentiation and marketing positions completely. They seem to be doing it again. If internal politics has prevented on or the other brand from going up market while the other goes down, they should have at least strictly differentiated the lines by how people have perceived the marques historically.

    If I were to make the product categories in this company it would be as follows:

    Citroën / Peugeot
    Avant Garde / Classic
    Modern / Feline
    High Tech / High Reliability
    New Tech / Robustness
    Comfort / Sportiness

    Under this matrix Sebastien Loeb would never have driven a Xara , but the spiritual successor to the 205 GTi. Citroen would get all the new tech (hybrid systems etc) and Peugeot would get the tried and true equipment that is vetted for reliability and longevity.

    But no, they had to resort to mediocrity and cannibalism.

    • 0 avatar

      I agree, though to some degree isn’t that what they are doing? Peugeot focusing on sportiness etc.?

      However what I really don’t get is why the DS5 did not get the hydropneumatic suspension. The steering is said to be lifeless, detached from the road, i.e. aimed towards comfort, while the suspension is rock hard, i.e. aimed towards sportiness. That makes no sense at all.

    • 0 avatar

      Sounds like a plan. And someone at PSA apparently thought it too with the DS line and all. Sadly they can’t follow through. Bertel a couple of days ago did an article explaining how low cost cars are the future. And I agree. So PSa is f….

  • avatar

    Or alternatively, this “plan” was just something hastily put together to satisfy the bigwigs in Brussels who could then pass it along to their constituents to show they’re doing their job. Sounds like a big smokescreen to me.

  • avatar

    The Peugeot 301 (and its Citroen C-Elysse cousin) are a nice example of the direction Peugeot SHOULD maybe be going: “cheapremium” cars that are nicely styled inside and out but don’t give you sticker shock. Still, these don’t seem to be “low cost” in the same vein of Dacia, which has become a cash cow. PSA would do well to keep one marque upscale and one marque basic to mainstream. Making both marques premium makes no sense.

    • 0 avatar

      Agreed, but pricing will be king. If they can match or exceed Dacia/Renault pricing by only 5% or so, it could be a runaway hit. Anything above 10% more and it’ll flop. In Brazil for 10% more than a Renault/Dacia you can get a Chevy Cobalt which has the brand cachet to do it. Peugeot? No way. They have to be very modest on price, get some sales, earn a reputation then they can charge more for better design. Better design now would only be a way to get customers if the car was on par with the competition. Right now, the market in BRazil surely does not see it that way.

      • 0 avatar

        Maybe PSA should look to China for a real partner. They MUST merge with another company to gain sales outside of Europe. No company, including Opel, can exist as an European only brand. Plus, the Chinese could come pre-loaded with a lo-cost brand like Chery or something along those lines.

        Anyone who thinks PSA will still be indie in 5 years is insane.Personally, I think GM shoudld merge PSA-Opel-Buick as some sort of global division. It could work out well for Opel and PSA in terms of small cars with Buick handling anything large. Also, GM will gain the air hybrid system which sounds great.

        • 0 avatar

          PSA unlike Renault has not forged a partnership with a company outside Europe and now are reaping all the negative aspects of not doing so.

  • avatar

    Correct me if I’m wrong, but didn’t Peugeot try to position itself as an upscale brand when it was sold in the US through the early ’90s? How’d that work out for them? And that was in a market that only got their larger and more expensive models and had no knowledge of their cheaper offerings.

  • avatar

    I know zip about PSA, but I keep hearing about brands “going upmarket”. Every brand cannot “go upmarket”, noobody wants to be Yugo but the sad truth is there will always be a lowest common denominator and a hierarchy up from there.

    Could this “upmarket” thinking just be an unconscious result or collateral damage from the massive amount of currency inflation going on?

  • avatar

    The lion has lost its growl. Hollande is palming the backroom boys caught in the rivers of death.

  • avatar

    Correction! While there were Peugeots under command of the bad guys in Ronin, the main bad guy and his car (which got far more air time) was a Citroen XM.

    (Which is a brilliant looking car that I’d love to take to a nice seafood dinner.)

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