Monday, July 25, 2016

Can PSA Make a Comeback?

Alexander Carabitses

About two years ago, I reported that PSA, the parent company of Peugeot and Citroen was looking into the idea of returning to the US.  This past April, it was officially confirmed that both of the aforementioned marques, along with PSA's luxury division, DS, would be selling cars in the US again by the year 2026. Granted, ten years is a long time to wait, but it is still great to see that the French are ready to dip their toes into the waters of the US market, after having to abandon ship in the 1990s.  

(Image credited to Peugeot)

The automaker's strategy for re-entry calls for a three step process that will supposedly kick off next year.  Step 1 will call for PSA to get involved with car sharing, which will allow it to test if Americans are open to driving French cars.  If these results are positive, step 2 will come into play, and will call for PSA to focus on mobility solutions through the use of PSA cars.  The final step calls for PSA cars to become available for retail sale.
(Image credited to Citroen)

This three step plan is interesting, to say the least. It is fascinating to see that PSA Automotive's plan calls for the company to play a part in two potentially big automotive trends (i.e. car sharing and mobility services) right off the bat, in a massive effort to become relevant.  It also leaves ample time for the automaker to create a dealer body that will support the fledgling automaker. Let's face it, PSA needs to get this relaunch right, and it would be unwise to rush things and have cars on sale before the end of the decade.  However, I do have my doubts regarding the idea that car sharing will draw in the type of consumer feedback that PSA is looking for.  None the less, I am a big fan of this incremental relaunch.

(Image credited to DS)

The real question is this:  Will French cars prove to be popular in the US?  Well I don't think that there is a definitive answer to that question.  In reality, there is an entire generation of US car buyers that remember French cars being deplorable in terms of quality and reliability; that particular generation will never buy French cars.  Let me be clear though, the quality and reliability of French cars has dramatically improved since those days, and I think that younger generations will be open to them and walk away satisfied.  Peugeot has a great line of cars and crossovers that could prove successful here, and should prove to be PSA's greatest advantage and asset.  Citroen and DS are two different stories entirely, but I think that Citroen will eventually find customers who appreciate cars with quirky styling, and that both Citroen and DS eventually build up product portfolios that are better suited for the US market.

(1991 Peugeot 405, the final Peugeot model to be sold in the US.  Image credited to Peugeot)

There is no doubt that PSA's relaunch is happening at a very interesting time for the US auto industry.  New mobility services are spawning out of nowhere and autonomous cars are being tested all across the country.  However, the US market is also becoming a target for sales and profit growth for many automakers.  PSA is returning to the US with three brands, while at the same time, South Korean automaker Ssangyong is toying with the idea of selling cars in the US.  Two years ago, SAIC owned MG Motors announced that they are looking into the idea of eventually returning the US market, and given that SAIC is a Chinese automaker, the company could have some leverage over other Chinese brands, with an iconic name, better vehicles, and a new image.  Finally, Skoda has recently announced that they too want to enter the US market given that they are already quite successful in China and Europe, but want to grow further.  If all of these brands make official plans to come to the US, it seems pretty safe to say that 2026 could end up being the year that all of them officially launch.  Keep in mind, I'm sure that there are many other Chinese automakers that are eyeing a US launch, and are probably cringing at the news that large, well known, global automakers are eyeing the US Even though many of them are not well known  in the US (much like the Chinese automakers themselves), it won't take long for these automakers to gain a foothold in the US.
(Image credited to Ssangyong)
(Image credited to MG Motors)
(Image credited to Skoda)

Long story short, PSA is leading the flock of automakers that are seeking entry into the US market.  Its success will be calculated by how well the brand initially launches.  A well executed launch could prove to offer a promising future, while a botched up launch can spell disaster.  It will be interesting to watch and see how it turns out.

That's all for now.  I want to take this moment to apologize for the two stanzas that have a smaller font when compared to the others.  Unfortunately, Blogger has developed a glitch that I have not resolved yet. Thanks for reading and have a good week.

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