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Ken Gratton12 Feb 2015
NEWS

Citroen's local business model in flux

Green shoots appearing, as French brand's sales volumes begin to accelerate

Citroen is a brand in a state of transition. The company has been through an awkward period in recent times, both in Australia and globally.

Things are looking up, however, with the C4 Picasso joining the local range just this week, and the Grand C4 Picasso – up from 61 sales in 2013 to 244 last year – and updated Berlingo van boosting the brand's sales in Australia during 2014.

There's an updated DS3 due in April and the company's first stand-alone foray into small SUVs – the Cactus (pictured) – is due here before the end of the year.

The company's previous offering in the small SUV segment – the C4 AirCross – has been discontinued. A badge-engineered Mitsubishi ASX, the C4 AirCross sold just 50 units last year, down from 133 the year before. Peugeot's almost identical 4008 sold 1240 last year and was Peugeot's most successful model in Australia.

"The AirCross doesn't fit with the typical Citroen buyer in this country," admits John Startari, Citroen Australia general manager. The importer clearly has higher hopes for the Cactus, which will be likely positioned lower in the market, but it won't necessarily be much more affordable than the C4 AirCross when it arrives.

With the C4 Picasso priced at $40,990, as one example, Citroen is determined to find a balance between specification and profitability – the importer's previous attempts at growing sales with loss leaders having failed. In fact, there's a full $10,000 bracket between the flagship C4 at around $30,000 and the Picasso. Expect the Cactus to occupy at least part of that gap, by the time it's optioned up and/or launched in different levels of trim.

Just how the Cactus will be priced and specified is yet to be determined though, according to Startari, who told motoring.com.au earlier this week that local market research clinics for the small SUV are still being conducted.

Introducing a six-year/unlimited-kilometre warranty last year has helped Citroen's conversion rate in the showroom. It has encouraged customers not only to place the brand on their shopping list, but seriously engage with sales staff when it comes time to make a decision.

As a consequence of all those things, Citroen sales in Australia increased by 10.8 per cent last year. That's a good sign for a company operating in a market that slid backwards by two per cent during the same period.

But Citroen is not another Audi; when it picked up double-digit percentage growth last year, that was on the back of local sales the previous year that had sunk to the lowest point since 2001.

In the period leading up to the GFC, Citroen sales in Australia had reached as high as 3803 units during 2007. Within two years the company's sales here had halved, and other than 2012 (1702 cars sold), sales never rose above 1500 units again. During 2012, former Citroen distributor Ateco Automotive was clearing all its stock ahead of relinquishing the brand to Peugeot distributor Sime Darby. For 2013, as Sime Darby's marketing efforts ramped up and new models began to come on-stream, sales fell as low as 1180 units.

This time last year Sime Darby had appointed 28 Citroen dealers to its local network, up from 19 during the Ateco period. Not all the Citroen dealers were carried over into the dealer network after Sime Darby took over. Clearly the distributor is still tweaking the network. Former Citroen Marketing Manager Manuel Tyras told motoring.com.au that he thought 28 dealers – the number in the network at the time – was about right for the number of cars the brand was selling in Australia.

But currently – with 24 retail sites and 29 service sites around the nation – John Startari is aiming for a dealer network of 37 outlets. Startari didn't offer a timeframe for that to happen – or even a sales forecast for the numbers to support such a network expansion. But he did advise that two new dealers have opened in New South Wales this year, with three more to follow later in 2015.

For the immediate future, the importer will grow "incremental" sales, introducing new entrants in the market – ie: without an antecedent in the Citroen range – and attracting new customers to the brand through that product offensive.

"In the short term, I think we're going to be realistic in our volume expectations, so we're considered a niche player," Startari said.

"Long term, it's going to be determined by future product releases."

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Written byKen Gratton
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