Paris show: PSA to split DS in Australia

PSA Peugeot Citroen has detailed its ambitious growth strategy for the newly created DS brand, with an Australian expansion on the cards that could include a dedicated DS store in a major capital city.

In a move that could create tensions in Australia at a dealer and distributor level, the French car-maker revealed last month that it planned to split its DS line of cars and SUVs away from Citroen, effectively becoming PSA’s new premium brand that will sit above Peugeot in its portfolio.

Speaking with GoAuto at the Paris motor show, recently appointed DS chief executive Yves Bonnefont said the bold plan included a model range expansion and a strategic geographical expansion.

“I have set a very clear priority for the brand to become more global, and we have an aggressive development plan for the brand,” he said.

“The plan is set around two directions. One is the increase of the product range. In Australia I think we have three cars in the market – we are going to, in the mid-term, have six models on the market.”

Mr Bonnefont said the second part of the strategy was to boost its presence in major cities around the world, acknowledging that DS buyers are more likely to be based in urban rather than regional areas.

“Now we are going enter the next stage of the international development of DS and we will do that with the ‘200 megacities’ plan,” he said.

“We have selected 200 megacities around the world where we say we are going to accelerate in those cities by implementing DS stores and offer a real experience of the brand for our customers in those cities.

“The beauty of that is we are in a unique position to be able to do that because on one hand we can decide where we want to go because we are a new brand so we have a lot of freedom to make our decisions.”

The DS stores are retail spaces that are designed and fitted out to give buyers an experience that is more in line with a high-end fashion house than a traditional dealership.

Currently DS stores are operational in China, a market that PSA has been aggressively targeting under its joint venture with Chinese car-maker Dongfeng, which purchased a 14 per cent stake in PSA earlier this year in a deal forged in conjunction with the French government.

While the global strategy aims to differentiate the Citroen and DS brands, Mr Bonnefont said aftersales service would continue to be managed through Citroen dealers.

“We can rely on the existing Citroen network to service the cars throughout that country,” he said.

“We concentrate our flagship stores in some large cities where we really offer the great brand experience to our customers, and then we can promise, wherever they go, they can service their car as needed in the Citroen network.”

Sime Darby Motor Group, which is the Australian distributor for Citroen and Peugeot, has reacted cautiously to the new strategy for DS, with PR and communications manager Jaedene Hudson emphasising to GoAuto this week that “there are no plans at this stage” to follow the global strategy.

However, Ms Hudson admitted that the company would be required to eventually adopt the global strategy, despite Citroen being only a niche player in the Australian market and relying heavily on the DS line for sales volume.

“We will follow the global strategy but there are no plans at this stage – as in right now,” Ms Hudson said.

“Each country will transition separately towards the global strategy over time, based on the business case. It will happen when the business case is approved.

At this stage, locally, we don’t know when that will be.”

Asked if DS models would continue to be sold at local Citroen dealerships, potentially in a separate section of the retail space, Ms Hudson said it was unclear exactly how the strategy would work in Australia.

“It’s too early to tell what shape this will take but there would be separation between the two brands,” she said.

Mr Bonnefont said introducing a DS store to Australia “would make sense” and highlighted the booming premium segment as a strong incentive to split the range Down Under.

“Time-wise, I don’t know when Australia is on the planning, but it would make sense because the premium market in Australia is significant and so we see definitely an opportunity there.”

The Australian DS line consists of the Citroen C3-based DS3 hatch and cabriolet, the C4-based DS4 hatch and the DS5, which shares its underpinnings with the previous-generation C4 Picasso.

While Mr Bonnefont would not go into detail about the additions to the model range, he confirmed that the company would introduce SUVs, and that Australia would benefit from the expansion.

“We are going to focus on the six segments that have the most growth potential throughout the world. That is a mix of SUVs and sedans as you can imagine, which I think would fit very well in the Australian market.”

The addition of an SUV to the Australian line-up is a logical move, according to Mr Bonnefont, given the take-up of high-riding wagons in the marketplace.

“We will probably really take off in Australia when we come to the market with an SUV,” he said. “But we want to create the foundations (first).”

Citroen launched the DS 6WR SUV in China earlier this year, which is based on the striking Wild Rubis concept from the 2013 Shanghai motor show, but it is not clear if this will be one of the new SUVs for global consumption.

When Carlos Tavares took the reins as chief executive of PSA earlier this year, he implemented a ‘Back in the Race’ strategic plan that included the separation of the DS brand, and with it he created six global regions of focus.

Australia, which falls under the Asia-Pacific region (China is its own region), is being overseen by former Nissan Europe finance chief Emmanuel Delay, who Mr Bonnefont said will work hard to push DS and build on its low volumes Down Under.

“It is true that our sales in that region right now are relatively limited but we have made a strong commitment to grow the brand in the region and I am personally working together with Emmanuel on the plans to grow the DS brand in the region,” he said.

“We are very excited by Australia.”