Purpose

I will try my best to provide detailed info on various cars and what is like to live with them, I have already produced a few for Jaguar-car-forums, I will do my best to be unbiased, but it will be hard for some cars. I will re-produce press releases and copy from other motoring news.

Monday 18 May 2015

The DS Brand is betting big time on the future, can it succeed, or will it falter at the first hurdle !

Making a success of the DS brand is one of the biggest tasks facing PSA/Peugeot-Citroen CEO Carlos Tavares as he seeks to turn around Europe’s second-largest automaker after Volkswagen Group.
PSA revived the DS badge for a range of near-premium models five years ago, hoping its association with the iconic DS cars built by Citroen in the 1950s and 1960s would give the line instant appeal.
Tavares made DS Automobiles a stand-alone brand in April last year in a bid to boost PSA’s profitability by increasing sales of higher-margin cars aimed at customers in Europe and China.

So far, the effect of DS has been underwhelming. PSA’s global vehicle sales rose by 4.3 percent to 2.94 million last year but DS sales fell by 3.4 percent to 118,472.
Tavares said DS is an “investment for the future.” The brand’s sales decline last year was due to a lack of new products, he said. “I am very excited about what I am seeing in the design studios [for DS],” he told Automotive News Europe.
Tavares is giving DS the time it needs to develop into a true premium brand that will one day be the French alternative to Audi. “Quality is a must and to deliver quality, you need to let people do whatever they have to do in the right timeframe,” he said.
Tavares believes the DS brand eventually will be viewed globally with the same high regard as France’s top fashion, food, wine and jewelry companies. “DS’s mission is to represent the sophistication of French luxury in cars,” he said.
Skeptical analysts
Industry watchers are skeptical about Tavares’s ambitions for DS. Max Warburton, an auto analyst at Bernstein Research, admires the idea of associating DS with French luxury but said: “Building a premium brand from scratch will be incredibly hard.”
PSA showed some of the DS brand’s new models to Warburton and other financial analysts at a Paris event in March. The future DS products on display were attractive but contained a mix of Audi, Infiniti and even BMW styling ideas, Warburton said. “The end result is arguably undifferentiated or even confused,” he said.
Warburton wonders whether PSA can afford to spend 15 years building DS into a successful brand. It will be expensive and so far the DS3 subcompact hatchback, which is not sold in China, is the brand’s only hit, he said. In Europe last year, DS sold 85,000 cars with the DS3 accounting for 53,000 of those units, according to JATO Dynamics. The brand’s No. 2 seller in Europe, the DS4, was far behind with a volume of 19,500.
Evercore ISI analyst George Galliers, who also attended PSA’s presentation, said the DS models that are due to arrive starting in 2018 look attractive and appear competitive, but two to two and a half years is a long way off. He said it is unlikely that DS is causing BMW, Audi and Mercedes-Benz executives “too many sleepless nights.”
Galliers said it took Audi 14 years and two complete model cycles to achieve “premium” status. Only Audi and Land Rover have successfully penetrated the European premium space with significant volume while other brands, such as Volvo, Saab, Lexus, Infiniti and Alfa Romeo, failed to achieve breakthroughs.
But DS could be a winner if it is successful outside of Europe. “The increasing importance of China and other markets means that success in Europe is less important than in the past,” Galliers said. DS could become a true premium brand in China and in other international markets, while remaining “near premium” in Europe. 
Such a scenario would work for PSA, he said. DS sales in China increased more than fivefold to 26,978 last year. PSA builds three DS models in Shenzhen, China, and the brand has a stand-alone dealership network with 80 DS Stores covering China’s 60 largest cities.
Lack of new products
Tavares said DS’s product lineup was hurt when PSA was forced to reduce investments during the worst of its financial crisis in 2011 and 2012. “When you start cutting investments, you see the consequences three or four years later,” he said.


This lack of momentum is evident in DS’s European lineup: the DS3 is now 6 years old; the DS4 compact hatchback and the DS5 midsize station wagon are each 4 years old. The brand’s 86,044 sales in Europe last year were down almost 20 percent compared with 2013. DS’s volume decreased by another 16.6 percent to 20,117 units in the first three months, according to industry association ACEA.

PSA has not released information about DS’s upcoming models. Industry insiders expect the brand’s next major launch will be an entry into the booming subcompact SUV/crossover segment in 2018. Between that year and 2023 DS plans to debut five all-new models. The product offensive is likely to include a flagship sedan aimed at reconnecting the brand to the original, shark-nosed DS sedan launched in 1955. In the meantime, DS is updating its current range. The brand unveiled a face-lifted DS5 at the Geneva auto show in March and a revised DS4 is due late this year.
Product misstep
PSA did not always make wise use of the scarce money it invested. The DS6 WR compact would have been ideal for crossover-hungry Europe but it was developed only for the China market. Tavares said the decision to engineer the car just for the world’s largest market happened because PSA’s individual divisions were “insulated into separate silos.”
If PSA had spent 10 percent to 15 percent more on the DS6 WR’s development, the car could have been engineered for markets such as Europe, Russia and Latin America, the CEO said. It would be too costly to try to make those changes now, said Tavares, who is restructuring PSA to prevent a similar misstep from happening in the future.
While Tavares has declined to give a sales target for DS the brand’s CEO, Yves Bonnefont, said in a separate interview that DS could eventually account for 10 percent to 15 percent of PSA’s global sales, up from 4 percent last year. If Bonnefont is correct and if PSA maintains the same volume as last year – 3 million sales – DS’s annual contribution would be 300,000 to 450,000.
Tavares, however, is not fixated on big numbers for DS. Pushing volume to the detriment of margins would be a sign of management weakness, he said. Growing DS in an unhealthy way through high volumes would be “extremely easy,” he said, while adding that PSA does not need another volume brand to add to its Peugeot and Citroen marques.
Luca Ciferri

No comments:

Post a Comment

Please leave a message, I will verify them swiftly, Sorry to have to do this now as some twat keeps spamming my message system, unfortunately they are ignorant and spoil it for everyone else,

Note: only a member of this blog may post a comment.