Groupe PSA is still planning to bring the Peugeot to brand back to North America by 2023, PSA North America CEO Larry Dominique said during a keynote address to the Center for Automotive Research’s annual Management Briefing Seminars.
Dominique said during his virtual address that PSA North America is still wrestling with the shape of its retail network for the Peugeot brand, which last sold vehicles in the U.S. in 1991. The challenge has been exacerbated by the COVID-19 pandemic, which has put pressure on traditional network, Dominique noted.
PSA will use franchise dealers, but it also expects to lean heavily on online retailing, he said. The fact is customer satisfaction with the traditional automotive retailing, when measured against other businesses, isn’t stellar. However, a whole range of surveys show that buyers have taken to purchasing a new vehicle on the internet, Dominique noted.
Moreover, the pandemic has shown that online retailing is effective particularly in large metro areas. The margins on the sales of new car sales are very small, he said. They are basically at zero before manufacturers add in incentives boosting the profit margin to around 2.3%, he said.
Making the process even tougher is the fact that manufacturers have prodded dealers into building larger and more expensive dealerships to very specific standards. “In one case, you had to order a certain kind of marble,” he said.
But the shift to online retailing demanded by consumers is making such stores obsolete.
“To this day we’re still building huge dealerships costing tens of millions of dollars exacerbating the very fixed cost absorption model existing today,” Dominique said.
He added this was happening “at a time when our research tells us consumers are looking for a simpler, more efficient process, our retail structure defaults to spending money on fountains and Taj Mahals — a good example of disconnect or lack of reality if you ask me.”
Groupe PSA announced in 2016 its return to the U.S. market would happen in three phases, outlined in the Push to Pass strategic plan: mobility services at first, mobility services with Groupe PSA’s vehicles then and finally retail sales.
PSA recently spun off its mobility unit, Free2Move, and PSA North America’s mobility efforts are now limited to one metropolitan area – Washington D.C., which has become a test lab for PSA North America, Dominique said.
Dominique also addressed the pending PSA’s pending merger with Fiat Chrysler N.V., which is expected to close in early 2021 and begin operations under a new corporate name.
“You may have your own opinions of the name but it’s clearly unique and represents a modern, less legacy-minded (entity) than individual existing names,” he said. “I mean, after all, compared to PSA-FCA, or FCA-PSA, Stellantis sounds pretty good to me.”