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PSA taps wealthy Chinese to counter weakness at home
By Feng Jianmin and Lu Nengneng |
July 23, 2012, Monday
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Print Edition
Print Edition
WHEN the world's economy is threatened by a downturn, companies seem to have reached a conclusion that Chinese consumers, especially the growing middle class, could save them from a downfall.
PSA Peugeot Citroen, Europe's second-largest carmaker, is among the declining power that seeks to rebuild its prosperity in the east.
While PSA's European branch is struggling with political barriers to the company's massive lay-off plan, its China side is busy promoting the high-end DS line to the wealthy Chinese.
Changan PSA Automobiles Co, a joint venture between the French carmaker and its Chinese partner Changan Automobile Group, has started to offer the imported DS4 coupe and DS5 crossover after officially introducing Citroen's sub-brand DS to China last month.
"The market in Europe today is very difficult. The size is reducing and the competition is very high," said Arnaud Ribault, general manager of DS division at Changan PSA Automobiles Co. "We think it's the right moment to launch DS in China because the premium car market here is booming."
Holding the upbeat outlook, PSA aims to sell 950,000 cars in China annually in 2015, of which 200,000 units will be under DS brand.
To meet this goal, Changan PSA said it will open 200 stores in 111 Chinese cities in the coming three years, selling three domestically-produced DS models and two imported ones. By the end of July, 11 stores will be operating in full swing.
The plan is ambitious but DS may end up in a dilemma if it aims to be both popular and premium within a short period. The vision of achieving annual sales of 200,000 units within three years may be too bold for a new comer in the luxury car segment. After operating in China for two decades, Mercedes Benz barely delivered such a number last year.
And the high-end image of DS could be brought down by its decision to produce cars domestically starting next year and to keep the Citroen logo at the car front. Though Citroen has a long history of making luxury cars in Europe, the brand's image in China is largely built on sales of economical cars in the past two decades.
Ribault admitted DS lacks brand awareness in China and needs time to educate the market. That's why the DS dealer network will be separate from the existing one of Citroen to increase the brand's visibility.
But before DS manages to do so, it cannot expect too much from the market to its offerings. After all, China is busy dealing with its own economic challenges and expanding restrictions on new car purchases to ease choking smog and traffic. The country's auto market has potential but doesn't provide panaceas for ailing companies.
PSA Peugeot Citroen, Europe's second-largest carmaker, is among the declining power that seeks to rebuild its prosperity in the east.
While PSA's European branch is struggling with political barriers to the company's massive lay-off plan, its China side is busy promoting the high-end DS line to the wealthy Chinese.
Changan PSA Automobiles Co, a joint venture between the French carmaker and its Chinese partner Changan Automobile Group, has started to offer the imported DS4 coupe and DS5 crossover after officially introducing Citroen's sub-brand DS to China last month.
"The market in Europe today is very difficult. The size is reducing and the competition is very high," said Arnaud Ribault, general manager of DS division at Changan PSA Automobiles Co. "We think it's the right moment to launch DS in China because the premium car market here is booming."
Holding the upbeat outlook, PSA aims to sell 950,000 cars in China annually in 2015, of which 200,000 units will be under DS brand.
To meet this goal, Changan PSA said it will open 200 stores in 111 Chinese cities in the coming three years, selling three domestically-produced DS models and two imported ones. By the end of July, 11 stores will be operating in full swing.
The plan is ambitious but DS may end up in a dilemma if it aims to be both popular and premium within a short period. The vision of achieving annual sales of 200,000 units within three years may be too bold for a new comer in the luxury car segment. After operating in China for two decades, Mercedes Benz barely delivered such a number last year.
And the high-end image of DS could be brought down by its decision to produce cars domestically starting next year and to keep the Citroen logo at the car front. Though Citroen has a long history of making luxury cars in Europe, the brand's image in China is largely built on sales of economical cars in the past two decades.
Ribault admitted DS lacks brand awareness in China and needs time to educate the market. That's why the DS dealer network will be separate from the existing one of Citroen to increase the brand's visibility.
But before DS manages to do so, it cannot expect too much from the market to its offerings. After all, China is busy dealing with its own economic challenges and expanding restrictions on new car purchases to ease choking smog and traffic. The country's auto market has potential but doesn't provide panaceas for ailing companies.
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