{"id":127914,"date":"2018-07-17T17:24:13","date_gmt":"2018-07-17T21:24:13","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=127914"},"modified":"2018-07-17T17:24:13","modified_gmt":"2018-07-17T21:24:13","slug":"trump-tariffs-could-complicate-psas-u-s-market-return","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2018\/07\/trump-tariffs-could-complicate-psas-u-s-market-return\/","title":{"rendered":"Trump Tariffs Could Complicate PSA\u2019s U.S. Market Return"},"content":{"rendered":"
\"\"<\/a>
While new Peugeot models, such as this 3008 crossover, would work for North America, PSA will develop unique U.S. products.<\/figcaption><\/figure>\n

On Thursday, the U.S. Commerce Dept. will hold hearings in Washington, D.C. to decide if, as President Donald Trump has suggested, imported automobiles pose a threat to national security. If so, the White House could follow up with new tariffs of up to 25% on those vehicles.<\/p>\n

That\u2019s on top of the previously enacted tariffs on steel and aluminum that have already begun to drive up production costs for domestic manufacturers. And the industry\u2019s response has been fierce in its opposition to the Trump administration’s proposal.<\/p>\n

\"\"<\/a>
Stay in the Loop!<\/figcaption><\/figure>\n

But as much as the potential tariff hike has complicated matters for existing manufacturers, it is raising even more challenges for potential new entrants to the U.S. market, including PSA, the French parent of the Peugeot, Citroen, Opel and Vauxhall brands, which is in the midst of developing a strategy to return to North America for the first time in more than a quarter century.<\/p>\n

\u201cI\u2019m crossing my fingers\u201d and hoping the tariffs aren\u2019t implemented, Larry Dominique, the veteran auto executive who now serves as the U.S. president and CEO for PSA, said during a meeting with reporters at the Detroit Automotive Press Association on Tuesday. \u201cI\u2019m hoping by the time we start importing vehicles this won\u2019t be an issue.\u201d<\/p>\n

Next month will mark the 27th<\/sup>year since the Peugeot brand officially left the United States, the victim of declining sales and deep losses. Two years ago, PSA said it wanted to stage a comeback to North America, though Dominique, the then-new chief executive for the U.S. and Canada, cautioned that he was going to move slowly and cautiously, developing what he likes to call a \u201c50-year plan.\u201d<\/p>\n

\"\"<\/a>
PSA's new US chief, Larry Dominique previously served as top U.S. product planner at Nissan.<\/figcaption><\/figure>\n

The first step came with the launch of a small car-sharing service based near LAX, the big Los Angeles airport. The company is pushing into mobility services that will eventually include car and ride-sharing as well as the ability to schedule and pay for multimodal travel through a single smartphone app, dubbed Free2Move.<\/p>\n

(PSA picks Atlanta as North American headquarters. <\/em>Click Here<\/a><\/span>\u00a0for the story.)<\/em><\/strong><\/p>\n

Initially, the vehicles used in the car-sharing service are supplied by their owners, giving them discounted airport parking and the possibility of sharing revenues while their vehicles are rented out. The next step will come \u201cin a couple years,\u201d Dominique said, as PSA begins importing vehicles from Europe to test out through the sharing service. The final phase of the plan will see the French automaker re-establish a retail network to compete directly in the North American new vehicle market.<\/p>\n

During his appearance at the APA luncheon, Dominique was coy about key details of the re-launch. Among other things, he wouldn\u2019t say what brand PSA will use when it returns, though it\u2019s widely expected to be either Peugeot or Citroen. The first products will specifically be designed to meet the \u201ctastes\u201d of U.S. buyers, the CEO said, as well as to comply with American regulations. With California one of PSA\u2019s key target markets, at least some of the vehicles will be electrified. PSA itself has said it plans to have battery-based powertrain options for all of its products within the next five years.<\/p>\n

\"\"<\/a>
The Citroen C4 Cactus features air bumps on the doors and bumper designed to cut down on the dents.<\/figcaption><\/figure>\n

One thing Dominique did stress was his desire to create a very different sort of retail network from what\u2019s in place today. And there\u2019s good reason considering that without manufacturer support, most dealers would actually lose money on every vehicle they sell. Industry-wide, about 32% of the sticker price of a new car, truck or crossover goes to marketing costs, which includes incentives and retailing.<\/p>\n

\u201cWe need to deliver a retail model that allows our partners and ourselves to make money selling cars,\u201d he said, adding that one of the challenges will be to work around the myriad \u2013 and often highly restrictive \u2013 franchise laws in place around the country. Only five steps allow direct factory sales, though that includes California, the largest single vehicle market in the U.S.<\/p>\n

(<\/em>Click Here<\/a><\/span>\u00a0for details about GM completing the sale of Opel\/Vauxhall to PSA Group.)<\/em><\/strong><\/p>\n

Initially, the PSA roll-out will be slow and cautious as it tests the waters to see if it can attract the right sort of buyers. It\u2019s not yet determined, in fact, if the company will ultimately target all 50 states or focus on just the key markets, like California, Texas, Florida and New York, that represent a disproportionate share of U.S. car sales.<\/p>\n

And then there\u2019s the threat of incentives. Dominique said he is optimistic things will work out in a positive way for the industry. Then again, in a worst-case scenario, he said, \u201cI could launch in Canada,\u201d and hold off on a return to the U.S.<\/p>\n

Another possibility would be to sidestep the tariffs, possibly by building a U.S. assembly plant, like the one Volvo just last month opened in Charleston, South Carolina. But Dominique is reluctant to \u201cindustrialize,\u201d a billion-dollar process, until it is clear there would be a market for vehicles built at a North American plant.<\/p>\n

How soon the PSA retail network will debut is another unanswered question, though the CEO hinted the necessary products are still \u201ca few years\u201d away. Even if the White House does decide to expand its global trade war, that gives time for things to be resolved. In fact, there\u2019s some talk about eliminating automotive tariffs entirely between the U.S. and Europe.<\/p>\n

(PSA lays out three-stage plan for return to the United States.\u00a0<\/em><\/strong>Click Here<\/a><\/strong><\/span>\u00a0for the story.)<\/em><\/strong><\/p>\n

In the meantime, PSA\u2019s North American team will continue developing its comeback strategy out of its new headquarters in Atlanta. Dominique expects to have between 50 and 80 employees in place there by year-end, with a bigger ramp-up to follow as the necessary pieces begin to fall into place.<\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. Commerce Dept. will hold hearings on Thursday in the nation’s capitol to decide if imported automobiles represent a threat to national security. If so, the White House could impose a 25% tariff on those vehicles, which would certainly complicate PSA’s plans to return to the United States. For more, go to TheDetroitBureau.com.<\/p>\n","protected":false},"author":2,"featured_media":122800,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[7,8,5],"tags":[],"make":[47,91,94,92],"post-state":[],"category_old":[150,151,123,204,289,299,132,188,125,184,297,187,139,172,288],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/127914"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=127914"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/127914\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/122800"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=127914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=127914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=127914"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=127914"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=127914"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=127914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}