Peugeot has accelerated its plans to launch its brand on North American shores, from its original, tentative 2026 timeframe to a more recent announcement that it could be here as soon as three years from now.
That means acceleration of Peugeot’s product planning and homologation, the strengthening of its executive core, lining up ad agencies and dealers, and focusing exactly what Peugeot means in a flattening market where sales are down and incentives are up.
And while its current lineup of cars and SUVs is indeed compelling to a smattering of Europhiles, Peugeot U.S. CEO Larry Dominique said don’t expect any of them to come to America.
“You can’t have region-specific products. But in homologating our next-generation products, all U.S. requirements are all embedded,” Dominique said in an exclusive interview at the J.D. Power Automotive Forum in New York. “You have a single opportunity to do it right. So to bring in an existing portfolio that may have compromises associated with North American needs would be foolish.”
On the plus side, that means we won’t get warmed-over European-market cars that don’t address American consumers’ needs. That sort of stubbornness (combined with shoddy quality) spelled doom for Peugeot the last time they came to our shores.
Here are the 10 highlights of MotorTrend’s wide-ranging interview with Dominique:
Why Peugeot accelerated its plan
“The original push to pass plan, which said 2016 to 2026, were the bookends. Obviously 2016 was the starting gate, and 2026 was kind of the maximum outside expectation. As we’ve developed over the last two and a half years, identifying the brand, looking at our distribution scheme, looking at our after-sales, financing, all the other elements of the business you got to put in place, we developed a roadmap. It’s still not completely locked in stone, because we’re going to launch cars when we’re ready to launch cars.”
The cars will be designed with global customers in mind
“We’re making sure that we’re setting the requirements for North America, what we need for the North American consumers. And that’s the other reason why we didn’t jump ahead and try to homologate an existing vehicle. With the acquisition of Opel, we immediately acquired in our engineering base who already homologated vehicles for North America under General Motors. It’s actually allowed us to speed up the process.”
It will be a limited product line
“The segments that matter in the U.S., there’s five key segments: Compact sedan, compact SUV, midsize sedan, midsize SUV, and full-size truck – and no, I do not have a full-size truck. Anything beyond that, especially in the first generation of products, would be a distraction. If you try to position a B-segment this, or an A-segment that, or a specialty segment over here, you’d be just distracting yourself from the core business of a core model strategy.”
What still needs to happen
“This is not just about turning on the spigot. This is about how are we going to import cars, and where are we going to import cars, how we are going to manage the service and financing side of the equation. It’s really building an OEM from the ground up in the US and Canada. I’m not just thinking about retail, I’m thinking about independent aftermarket. I’m thinking about how I’m going to service and move parts around the United States. Then there’s the digital side of this business: How we set up our platform, the kind of partners we engage, either on the consumer side on the B2C side, or on the B2B operational side, is a key part of what we’re doing right now.”
Peugeot is likely aiming at Millennial shoppers
“The average age of an automotive customer, on average is 55 years old. There are some OEMs where the average age is in the upper 60s. They all talk about millennials. They all talk about Gen Z. But they’re dependent every single day on Baby Boomers. The great news for me is I’m not. I have also a greenfield opportunity so I can focus and go after these future consumers. Being a French brand is actually a very positive thing in most consumers’ minds. And when they look at our products, they love our products. We’ve done dynamic clinics, static clinics, so we’re very confident, and this is one of the things that also gives us optimism.”
Peugeot is going to shake up the dealership model
“The digital economy is here so we might as well embrace it, but we can do that in a way that’s still compliant from a legal point of view nationally both in the U.S. and Canada. For the first time in over a decade, the average dealer lost money on a gross profit level in the United States. Yet net profits haven’t really changed because OEMs are subvening that kind of support. So there has to be a change in the dynamic. We as OEMs love to define these big brick and mortar facilities, the colors of the tile, where you buy your furniture, how big your sign has to be. And in today’s economy, digital economy, we don’t believe anymore that that sells more cars. It’s a very costly model that’s struggling to maintain profitability.”
Peugeot will sell in a limited number of states
“We’re looking to launch in 15 states and four (Canadian) provinces over about the first five to eight years. We’re not going to launch in 50 states. We’re not going to throw billions of euros of investment to just saturate the market and bring a bunch of retail when the demand doesn’t exist. Brands like Hyundai go from zero to 100,000 in one year, and then they almost went bankrupt a couple times in the United States. How do we build a sustainable business in North America? You do that by being frugal, agile, not overinvesting and by building the brand organically.”
Peugeot won’t manufacture their cars here, at least not for a while
“Someday, we’ll look at industrialization when the volume makes sense. Near term, we’re talking about importation from multiple sources, primarily Europe. If you have a fixed cost base in Europe, and North America is incremental volume on that fixed cost base, I have a cost of goods that can benefit from not having to amortize $1 billion or $500 million (U.S. assembly plant) investment.”
The expected recession may delay, but not cancel, the North American launch
“We reported a full year financial and return on sales of 7.7 percent as PSA Group. I’m not gonna say we’re ‘recession proof,’ but we’re setting ourselves up to ensure we have the cash, the free cash, that we have the organization structure, that we have the cost structure in place to ride out those kinds of waves. We’re not going to do anything in North America that says we can’t develop the next generation of 3008 in France. The No. 1 reason why businesses fail, especially in a recession, is they’ve over leveraged themselves. They’ve invested too much or have too high of a fixed cost associated with the revenue turnover. We’re going to make sure that never happens.”
Peugeot is hiring executives without auto-industry experience in key roles
“If we’re talking about after-sales, the independent aftermarket, it’s a highly automotive kind of expertise. But I have two key hires in the process right now, one is in my digital customer experience director, and one of the key criteria is they cannot have automotive experience. I want people who understand the digital economy. I want people who understand eCommerce. I want people who understand the hospitality and customer satisfaction and have crafted digital journeys before. We as OEMs are not very good at that just in general as an industry. We make great configurators and make great websites, but we don’t have an integrated relationship with our retailing side of the business. The other really important position is our Peugeot Brand Chief for North America. And that one, the criteria is they should have some automotive, but they must also have non-automotive. What have they established in the way of other brands? How have they positioned non-automotive brands? Because we’re focusing on, first and foremost KPI, of everything we’re doing is customer satisfaction.”
The post 10 Things to Know About Peugeot Coming to America appeared first on Motortrend.
from Motortrend http://bit.ly/2ZihKdQ
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