PSA's Brand Strategy: Let's Make A Peugeot Sandwich

PSA announced their renewed brand strategy for their Peugeot and Citroen lines, and the situation has finally been clarified after frequent back and forth reports that contradicted one another. It turns out that PSA will employ a three-tier approach that is equally confusing, with Citroen as the lowest tier with Peugeot on top. But then there’s also Citroen’s DS line, which is supposed to be upscale itself. Confused? So are we.

A hand cheat sheet provided by PSA to Automotive News Europe outlines the “values” supposedly embodied by both Citroen and Peugeot.

PSA CEO Philippe Varin recently outlined the new product strategies for Peugeot and Citroen like this:

PSA was adamant that Citroen was not going to become a low-cost brand, but the next generation of vehicles will be positioned slightly lower than the current range. Does that mean the Hydramatic suspension, one of the brand’s hallmarks, will be gone? Let’s hope not. What will be happening is that Citroen vehicles will be positioned as “cheap premium” (whatever that means), with Peugeot being “premium” and to top it all off, Citroen’s DS line will be positioned as an even more premium range relative to Peugeot, if Automotive News has it right, which is difficult to ascertain, since PSA seems to change its positioning depending on what day of the week it is.

Further complicating matters is Peugeot’s schizophrenic offerings, including the low-cost 301 sedan which will be sold in emerging markets as a premium vehicle relative to the other low-cost competitors, if you buy into PSA’s spin. It’s a tough one to swallow, considering that Renault has poured so much time and effort into Dacia for the precise reason that the low-cost and premium brands should not mix.

Keen French car observers will also note that the brand values espoused here are backwards. Traditionally, Citroen had the elegant, dynamic designs and wild new technologies, while Peugeots were rugged and simple enough to endear themselves to the pied-noirs of Africa. Outside of France and Africa, Peugeot’s profile is basically nil – if the Citroen C6’s poor sales were an indication of how poorly premium French cars were received then the Peugeot 607 large sedan may have been the only offering to fare even worse, ending up largely in the hands of cab drivers.

The most succinct analysis of it all comes from Fitch Ratings, which noted

“We believe this strategy makes sense overall but carries substantial execution risk and could take many years to bear fruit. In particular, we are concerned that the existence of both entry-level/basic models and aspiring higher-end products within the two brands will not be easily understood and accepted by customers.”