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Citroen defends pricing strategy

Value, not cheapness, to better serve Citroen brand and its buyers in the long run

15 Oct 2019

CITROEN’S senior vice-president of global marketing communications, Arnaud Belloni, has called out criticism that the French brand’s current range of models is too expensive compared to its competitors, saying that many rival vehicles are priced too cheaply in Australia.

 

In an interview with GoAuto at Motorclassica in Melbourne last weekend, where Citroen celebrated its 100th anniversary, Mr Belloni said the misguided perception of high prices is the major reason why the brand’s sales have remained disappointingly low in Australia, adding that the practice is creating unrealistic consumer expectations of what value is.

 

To the end of September, Citroen sales are down 22 per cent and are expected to finish well short of last year’s 494 units for the full year, which was a 20-year low for the brand.

 

The brand is managed in Australia by independent importer Inchcape Australia, which took over distribution from Sime Darby in 2017.

 

“Citroen is in the heart of the mainstream brand, competing for example with Skoda and Hyundai,” Mr Belloni said.

 

“But in this market, the brand has not been properly managed over the last 20 years, the volume of sales is very low and there is space for improvement.

 

“So, Inchcape is working on the implementation of the entire storytelling of the brand, the one where we have operated everywhere in the world, and everywhere where it is working.

 

“Our job in Australia is to create value. Marketing and distribution have to be done at levels that permits making the positioning of our vehicles relevant. But, to be honest, it will not go the other way around. Our job is not to destroy value.

 

“This market is potentially priced too low compared to the rest of the world. Cars are now all imported and still the prices are very low. So, there is a tendency to destroy the value. That’s why we have to build the right storytelling that goes with the brand.”

 

Two examples of Citroens suffering from the perception of being too expensive are the C3 supermini and its C3 Aircross sibling, which have a manufacturer’s list price of $26,990 and $32,990 (plus on-road costs) respectively. In contrast, almost all competing alternatives offering similar specifications cost up to several thousand dollars less.

 

Mr Belloni is confident Australian consumers will eventually come around to his way of thinking, just as European buyers have, but he is also realistic enough to understand that it will not happen overnight.

 

“It means we won’t make volume rises immediately, but this is the jump we’ve done in Europe,” he said. “We were selling 650,000 units five years ago there, and losing money, and now we are at over 850,000 and making money. It is because we are telling the right story for Citroen.

 

“It’s part of establishing trust all over the world. It’s hard work, we are not arrogant, it takes time. We prefer to grow slowly in volume, but still create value. If we need to grow slowly but sustainably in Australia to achieve this, then I prefer to do that, rather than discounting massively, artificially drawing in business, and then leaving the market five years later.”

 

While Mr Belloni believes growth is an important part of Citroen’s global expansion aspirations, the company’s main thrust over the next year is centred around entering India for the first time, as well as regaining market share in China after a double-digit sales slump there over the past two years.

 

“We should go to 1.5 million, it’s part of the plan, especially with India and China recovering,” he said. “We are presently in 90 markets. There is a huge potential of growth in India, because we are launching the brand there next year.”

 

Mr Belloni revealed that Citroen’s transition from niche French offbeat brand to global player still has some ground to cover before it is complete.

 

“It’s not finished yet at all, but it’s getting there,” he said. “Of course, Linda Jackson our CEO is British – and that’s the first time the company has been driven by somebody who is not French; secondly, we are growing in Europe outside of France, but we still need to draw in India and China, where we need to recover very quickly, and grow in South America and Africa too.

 

“But with over 700,000 examples of the current C3 already sold since its European debut in late 2016, the SUVs the C3 Aircross and the C5 Aircross now launching … I think Citroen now has a world presence.”

 

Mr Belloni added that he would rather work for a mainstream giant that will stick around rather than a niche minnow on the perpetual brink of collapse.

 

“Citroen is an iconic brand so there is no point denying the past,” he explained.

 

“Citroen has made a legacy of cars that are incredible … but they are exotic too. These cars have made history like the DS and have been a massive success, yes, but they’ve sometimes also been a massive failure too, like the Maserati-engined SM.

 

“So, I prefer that our cars are more mature and are sold at much bigger levels rather than being niche and original but bought by nobody. That’s not to say today’s Citroens are not outstanding or bold or original, but of course we also need to make sure they can be sold anywhere in the world.

 

“We will keep original design, but just make sure they appeal to a large part of the global car-buying population too.”


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