SHANGHAI: PSA Group, the maker of the Peugeot, Citroen and DS car marques, plans to ditch its image as a budget brand in China and instead concentrate on offering SUVs and other non-compact cars for high-end Chinese consumers.
With Chinese consumers frequently associating French brands with quality, PSA has been frustrated that it has so far been unable to tap into the premium afforded to some of its European rivals.
Peugeot, for example, sold just 151,000 vehicles in China in the first half of the year, which compared unfavourably with the 1.83m units shipped by Volkswagen.
Denis Martin, PSA’s head of China and Southeast Asia, acknowledged that the company had been offering too many compact cars and too few SUVs at a time when affluent Chinese consumers have favoured larger vehicles.
“This market doesn’t want face-lifted European cars, but new and increasingly connected cars,” he said in an interview with Bloomberg.
To turn things around, PSA plans to introduce 18 new models by 2020, including its DS7 Crossback SUV, and is working with partners to launch a series of electric and hybrid cars.
Yves Bonnefont, CEO of the DS brand, has said that DS should become profitable in China soon, partly because it now shares production plants with Chongqing China Changan Automobile Co.
However, PSA is not planning on relying on partnerships and new models alone. According to Martin, the company is also looking to recruit a Chinese executive as head of its Citroen brand and is signing up Chinese celebrities, like actor Wang Kai, to promote its portfolio of brands.
Investment in marketing also will be essential, said Benjamin Cavender, a Shanghai-based analyst at China Market Research Group.
“Even if they do bring in more models, a much more aggressive marketing campaign is needed,” he said. “The new models are going to help them right away, but it’s also a multi-year process of supporting the brands and investing in their presence here.”
Sourced from Bloomberg; additional content by WARC staff