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Ken Gratton28 Feb 2014
NEWS

PSA outlook on the mend

Peugeot and Citroen global sales are growing, but the Australian market is proving a challenge
PSA Peugeot Citroen is recovering from dire financial prospects by selling a 14 per cent share in the company to Chinese brand Dongfeng. 
Dongfeng and PSA share a long history of marketing cars in China, and the French firm's selective targeting of consumers there has contributed to a 42 per cent gain in Peugeot and Citroen's global sales. 
"Sales outside of Europe, for the PSA group, continue to rise," explained Manuel Tyras, National Marketing Manager for Citroen in Australia, "and now attribute 42 per cent of total sales – with a very strong performance in China.
"The strength of the Asian region has seen a stronger alliance formed this week with Dongfeng. Dongfeng has partnered PSA for the last 20 years. Dongfeng produces 12 per cent of China's cars – and are the second largest producer of cars in that country. They're now 14 per cent shareholders in the PSA Group, along with the French government and the Peugeot family."
According to Tyras, PSA has been the leading patent filer in France over the past six years. The added investment from China and from global sales means more moolah for R&D. It is probably now looking like a clever career move for disgraced former Renault COO, Carlos Tavares – who has joined PSA as CEO. It's the opportunity he desired at Renault, but was unlikely to see realised while Carlos Ghosn occupied that position. Now, he seems to have joined PSA just as his new employer is seeing light at the end of the tunnel. 
In Australia, Citroen's DS line accounts for 35 per cent of all Citroen sales – versus 19 per cent average across other markets. That may be a result of buyers opting for the newer models in the range, but it may also reflect our national obsession with upmarket brands and products. 
The PSA brands, and Citroen in particular, have seen sales slip a long way back in recent years. Ateco had achieved strong results with Citroen after taking on the franchise from former distributor Franzcars, but Citroen's local sales stumbled during the Global Financial Crisis – and never really recovered. In fact, the situation has worsened during the year after Ateco lost the distribution of Citroen, which is now in the hands of local Peugeot distributor, Sime Darby. 
Citroen has never been a volume-selling brand in Australia, but in the two years prior to the GFC over 3500 cars were sold here wearing the dual-chevron badge. Since then sales have lost ground drastically, with the VFACTS tally in 2008 finishing the year at 2703. In the years since they have hovered between around 1400 up to 2000... and last year they fell to 1180. 
"If you look at VFACTS," Tyras told motoring.com.au, "[Citroen is] down 30 per cent... but we know internally the factors that caused that."
One example was the introduction of the DS5, during the final months of Ateco's distribution. The high-grade model entered the Australian market in petrol-only specification, as Tyras acknowledges, and in small numbers. 
"Really, customers came in saying: 'Where's the diesel?" he said. "We're known for diesel, we're strong with diesel..."
Ateco, for its part, argues that it could only sell what the factory provided in the initial production run – and diesel variants weren't anywhere to be found in that first shipment of cars. 
"A lot of the shortfall from last year was due to a shortage of diesel [variants] for the C4," Tyras also observed. "We found ourselves selling quite a few in May and June. That left us quite short in the back end of the year."
Whether the slow start for the DS5 might have been avoided or not, or whether the inventory was run too low for select variants during the course of the hand-over, Tyras is upbeat about the Citroen brand's prospects in Australia from this point forward, at any rate. 
"I think everything's [now] stabilised, and we're learning a lot more about our customers. If anything, our network's benefited from the change-over. We've got a stronger back-end. 
"We're concentrating a lot on training our network... supporting them in [servicing], and... that's where our strengths are."
The dealer network for Citroen in Australia has expanded from 19 to 28 on Sime Darby's watch, with a new dealership established in Parramatta, in Sydney's west. Tyras refutes that Sime Darby is seeding new Citroen dealers in areas not known for being traditionally rich in Citroen buyers. 
When Tyras says: "We're not looking to grow the network," he's expressing a desire to have the right number of dealers for the current sales tally and the anticipated growth in sales. By implication, Ateco's running of the Citroen dealer network was quite lean. 
"I think for the amount of cars we're selling, [28] is a good number."
So expanding the dealer network is an interim measure while Sime Darby rebuilds the brand's image in Australia. 
"We've got to do that job of putting Citroen on the map, or on the consideration list..." Tyras concluded. "That's first and foremost."

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Written byKen Gratton
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