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PSA China results unacceptable, says Tavares

Carlos Tavares, CEO of French OEM group PSA, is unsatisfied with the 2016 sales results in China. Whereas the market in general went up 15 percent, Peugeot, Citroën and DS together sold 16 percent fewer vehicles than in 2015. “This situation is unacceptable. We are convinced that we can and must do better”, Tavares told journalists in Shanghai on the eve of the biennial motor show.

The three PSA brands are distributed through local partnerships in China, which combined sold 615,000 units in the People’s Republic. The total Chinese new car market represented 24,38 million units, which translates in a market share of 2.5 percent. Tavares wants his company to break the one million barrier by 2018.
 
Today, SUVs represent 40 percent of the Chinese market. That might explain why PSA is underperforming: its current portfolio seems out of touch with the current customer preferences. That is about to change: later this year, the company will launch the Citroën C5 Aircross and DS7 Crossback.
 
But Tavares says PSA needs more than just the right products to reach its ambitions. “We face challenges in terms of dealer network, commercial policy, communication and marketing – basically in the entire spectrum”, he said. “Our results show we have not found the right formula yet and that we need to pull out all the stops to make a change”.
 
Moreover, the Chinese market is involved in a raging price war, leaving tens of PSA brand distributors in financial difficulties as they are selling cars at a loss. Tavares explained that the group cannot continue to support dealers that are themselves responsible for their negative margins, underlining the need for a change in sales policy as the Chinese market evolves towards maturity.
 
At the same time, PSA itself has opened the hunt on costs in China in a bid to increase the margins for its distributors.
 
Picture copyright: DS, 2017
19/04/2017  |  Dieter Quartier

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TAGS : PSA Dongfeng Tavares 
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