Peugeot reclaiming the high ground

Australians still regard Peugeot as a little bit more posh than volume-selling models from other brands, according to market research.

That's despite the steady sales decline in Australia over the past 10 years.

The recently-appointed distributor for the brand, Inchcape, is determined to keep pushing the brand's semi-prestige image in this country, even though Peugeot is considered 'mainstream' in its homeland.

To illustrate how that works in practice, the new 5008 SUV (pictured) is being sold here in three levels of trim, but we won't be getting the bare-bones model that is sold in Europe. The 5008 will be priced from $42,990, which is a moderately high starting price for a medium SUV in this country. It's "not a price-point vehicle," explained Anouk Poelmann, Managing Director of PCA, during the local launch last week of the 5008.

What this means, in a nutshell, is that Peugeot's sales and marketing team in Australia will target well-established brands with a reputation for building and selling a good product. The two brands specifically in the gunsights of PCA (Peugeot Citroen Australia) are Honda and Mazda, according to Ms Poelmann.

Another brand that could yield conquests for PCA is Subaru, of course, but Inchcape is the local distributor for that brand – so it's presumably off-limits. That begs the question though, is there potential for conflicting marketing activities within Inchcape in Australia? We put the question to a spokesman for Peugeot's parent company, PSA Groupe.

"The cross-competition between Subaru and our brands is probably very small," replied Emmanuel Delay, PSA's EVP and Operational Director for India-Pacific region.

"So I would doubt that this would ever be a reason of conflict. I think that given the starting point of where we are, we have a lot of room to improve, and we will win hopefully new customers from most brands. I couldn't see why we would steal market share from Subaru specifically, because it's not like the products are the same, or anything like that.

"I'm not worried about that at all. Actually... it gives me a lot of comfort to see that Inchcape has been able to support and to help Subaru, gain, maintain and even increase its stance in the market. I find that remarkable. Australia is now, for Subaru, one of the main markets.

"Subaru is a unique kind of niche brand, in my view. I know the cars quite well, actually. I used to own a Subaru myself, a long time ago.

"And yes, we can create the same type of love for our brands that Subaru owners can have for Subaru. I think Inchcape knows about how to turn that story [around].

"For them [Inchcape] there is no doubt that Peugeot is entitled to be a premium brand, and we don't want to be half-premium, half mainstream. We just have to go for premium, because we deserve it. I think they had the same view of Subaru, with a slightly different positioning, and they made it happen."

Pointed out to Delay that both the French brands (Citroen as well) share a World Rally Championship heritage with Subaru – and the competition vehicles from all three companies employed turbocharging and four-wheel drive – he distanced the road cars his brands build from the rally weapons and Subaru's product lines. The symmetrical all-wheel drive system offered in most Subarus is a unique marketing device that PSA is happy to leave to the Japanese brand.

"We do not want to be 'four-wheel drive'... in fact, it has been historically the view that we don't need to have 4x4 mechanicals, all-wheel drive solutions. So I think that for the time being, as a group, we maintain that position, but for us it's kind of the other story – turned around the other way, where we have two-wheel drive with Grip Control, all the good things that 99.9 per cent of customers should be happy with..."

Signs of a sales lift
Last year, Peugeot sold more cars in Australia than it did the year before. This was the first occasion in 10 years that the sales decline had actually reversed. Inchcape took control of distribution for the brand from previous distributor Sime-Darby during the third quarter of 2017. By that time old stock of the 308 small car that had been over-ordered was already in run-out, helped along by the incentive of an extended warranty.

In an instance of deja-vu all over again, Inchcape had taken the reins from Sime-Darby 16 years after it had relinquished distributorship of Peugeot in Australia to Sime-Darby. In the years since, Inchcape had steadily ramped up sales of Subaru in Australia, with the brand's share hovering around four per cent in a consistently growing market.

Sime-Darby also improved Peugeot's standing in the local market initially, but after 2007, sales dropped from the peak of 8807 vehicles – and continued to fall away each successive year. Peugeot's sister brand, Citroen, was being distributed by Ateco at the time. As in the case of Sime-Darby and Peugeot, Ateco had built up Citroen sales during the period prior to the global financial crisis, but sales suffered in successive years. In 2012, PSA ended its distribution agreement with Ateco and handed Citroen over to Sime-Darby.

Clearly, Inchcape – with runs on the board for Subaru – offered PSA an opportunity to reverse the sales trajectory of both brands. And it has to be a strategy that Sime-Darby couldn't seem to deliver. Delay was careful not to place the blame for slowing sales on the shoulders of the former distributor, and he acknowledged that perhaps the products weren't the right mix for the Australian market.

"Of course, you need to know what went wrong in the past so you don't repeat the mistakes of the past, for sure," he said.

"That's important to have a view on what happened, but at the same time, you know, that is the past, and now we have to look at the future. There is no one particular culprit not performing. I think it's a combination of factors; maybe the products are not adequate, or you have problems that you didn't expect, or you have a management team that is not performing – or maybe it's a combination of all.

"I think there is no one single reason why it didn't go well. Foreign exchange is also a key factor sometimes, and impacts performance."

Transformation, not reinvention
Anouk Poelmann is quite optimistic that Inchcape can return both brands to positive sales growth, and that to some extent will involve finding new ways of engaging with the buying public. But that doesn't necessarily mean a full-on relaunch or reinvention.

"The brand is as old or as young as 200 years, so you can ask yourself: 'Why does it need to be reborn?'," she told motoring.com.au.

"We need to reconnect to our history. I think that's very important. And we need to make people aware, what is the brand all about?

"The new, modern products – particularly 3008 and 5008 – the values of the brand... how do they reflect the product?

"The words, rebirth or relaunch or... it's about transformation, it's about transforming the customer mindset. This is what we need to work on.

"We should not walk away from the history at all, because the pioneering and the engineering... it's in the DNA of the company.

"History... you can get that message across by story telling, showing customers how Peugeot constantly invented and reinvented itself. You will see in a couple of days our advertising campaign launched. And you will see some of that engineering and transformational thinking; you will see it coming through the advertising campaign.

"Innovative thinking is in the DNA of the company.

The platform to convey that message of transformation is a big-budget advertising campaign, Ms Poelmann revealed.

"TV, cinema, outdoor and digital. It will start as a 5008 campaign only, but very quickly it will turn into an SUV range campaign, because... with the 5008 it is now actually an SUV range – three cars."

Which means that – reinvention aside – Peugeot is narrowing the product range from passenger cars (and LCVs) to just SUVs?

"We are not saying goodbye to passenger cars," she replied, but she also noted that SUVs were essential to PCA's growth in Australia, where SUVs outsold passenger cars for the first time last year.

"The trend... my understanding is that it will continue, and passenger [car sales] are going down.

"[Fortunately], We are with the right product in the right place."