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Sales recovery plan for Peugeot, Citroen underway

Point taken: The all-new 5008 launched last week will play a key role in the Peugeot brand’s sales recovery in Australia, which has already increased to the tune of 36 per cent in the eight months since Inchcape took over last year.

PSA/Inchcape target substantial sales growth for its French brands in Australia

5 Feb 2018

PSA Group executive vice-president and head of the India-Pacific region, Emmanuel Delay, has revealed that the Peugeot and Citroen brands are expected to achieve significant and sustained sales growth in Australia in the years ahead as the French car-maker attempts to turn around its fortunes under new distributor Inchcape Australasia.

Inchcape’s managing director of Peugeot and Citroen, Anouk Poelmann, has also told GoAuto that she believes the two brands can return to their previous heights of more than 12,600 annual sales combined achieved a decade ago – though not with any defined timeframe set down.

In an interview with GoAuto on the sidelines of the Peugeot 5008 SUV launch in New South Wales last week, Mr Delay said PSA has targeted cumulative sales growth of 25 per cent for the two brands in Australia by 2019 – and 50 per cent by 2022 – after a long period of negative growth.

Peugeot and Citroen have been on a downward trajectory since peaking in 2007 with 8807 and 3803 sales respectively, with Inchcape finally stemming Peugeot’s bleeding last year with an 8.4 per cent improvement over the previous year (to 3392 units) while Citroen fell 23.8 per cent (to 735).

Mr Delay said that ongoing growth was essential – “of course, we expect an increase compared to last year, that’s very certain” – but that a specific increase was not clearly defined.

“Will it be 10 per cent, 20 per cent, 25 per cent – another number – it doesn’t matter so much right now,” he said.

“What we want to do is, step by step, regain let’s say some improved market share. If we haven’t increased reasonably within three years, then we will be disappointed.”

In terms of defining what’s “reasonable”, Mr Delay said that under PSA’s current mid-term plan (operating since 2016), “in our region we say that within a three-year period we need to grow by about 25 per cent on a cumulative basis and if it’s six years, it should be 50 per cent”.

“That is the objective that we have for the region as a whole, so you can imagine that we have to be around these numbers – and hopefully we want to target better than that for any market – so I can say that … applies to Australia as well.

“If we do not achieve that, I think we will be disappointed.”

Inchcape management was quick to point out last week that Peugeot sales had risen 36 per cent since it took over from previous importer Sime Darby on June 1 last year, and Ms Poelmann said she believed the brand, and Citroen, could return to their previous heights.

“If history proves it’s possible, then I’m the kind of person that believes it’s possible,” she said.

“How fast and how easy – I cannot answer that question. But I think we just need to look for continuous growth, and if every time we do something we reflect on it, and we want to do better next time, eventually you will get there.”

That said, Ms Poelmann is under no illusion about the difficulties of the task ahead.

“It’s a very competitive market. I’m impressed by the amount of brands that are competing on this market – there are even brands that I have never heard of, which is just absolutely fascinating,” she told GoAuto.

“It’s a huge challenge, not just for the likes of us (at Inchcape) but also as a dealer. I mean, the fact that there are so many (brands) out there and potentially fighting for the same customer or trying to get the attention of the same customer, it’s a challenge.

“And being a small player in this market at the moment probably makes the challenge even bigger. So we need to be very smart, we need to be very efficient, we need to turn around every dollar two, three times in order to make it effective. And it’s hard work.

“I think that if you’re willing to step into that challenge, and you have the passion to do so, then I think, yeah, it’s possible, but it will not be an easy journey. Not for us, and not for our dealers.”

Mr Delay threw his support behind the importer’s strategy of building growth through measures such as aspirational positioning and strong customer experience initiatives as new models such as 5008 arrive on the market.

The current strategy will not see Peugeot or Citroen return to their 2007 peak any time soon – although they remain an internal target – but the move to take the brands upmarket is expected to at least lay a solid foundation and build profitability.

“The exact numbers – of course, we have some internal targets – but if I may say the most important is that we really turn around the business,” Mr Delay said.

“What I mean by that is, after a long period of difficulties, that we are able to get the business to turn around, and I think a lot of it has to do with, of course, hard work, also mindset change, and I think with this mindset change you could see that (with the 5008 launch).

“Price points could be something very important for other importers but for Inchcape that is not the point – our cars will not be very cheap cars. We don’t want to sell the metal at any cost. It is absolutely not our approach, so therefore, to be honest with you, volume is not the most important for us.”

Asked how the PSA brands could nonetheless build volume when Inchcape had moved to cut out entry-level models, Mr Delay said the newly defined targets could still be reached as prospective customers – most of whom are looking at higher-spec vehicles anyway – saw value in the premium positioning.

“What has hurt us, not just in Australia but other markets, was to have too much complexity and diversity within the line-up,” he said.

“We’re still covering the bulk of what we think are our prospective clients, so we don’t think it makes a big difference. And, frankly, because the starting point is honestly a little low, we think we have plenty of margin before we hit the ceiling of, you know, we have positioned ourselves so high that we are blocked and we cannot grow anymore.”

Mr Delay confirmed that returning to the heights of 2007 was a live issue – “that would be an internal target” – but added that “you know, sometimes you cannot look at the past, things have changed and we have to accept that”.

“Now is the starting point, this is where we are, and the past – 10 years ago – is almost irrelevant,” he said.

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