Xavier Peugeot, Product Director at Automobile Peugeot, is in a good mood on the eve of the Frankfurt motor show. Early media reaction to the new 308, due to be unveiled to the public the following day, has been largely enthusiastic; the 208 is vying with the Ford Fiesta for leadership of Europe’s supermini segment; and demand for the 2008, launched this summer, is so strong that a second shift has been added at the Mulhouse factory in eastern France.
On top of that, the share price has risen from a 52-week low of €4.32 (US$5.77) to more than €12 as the company implements the closure of its Aulnay plant north of Paris as part of more than 8,000 job cuts agreed with the unions.
The success of both the 208 and 2008 has given the company confidence, says Peugeot. He traces the turning point in its product revival to 2009, when the company launched a new programme aimed at redefining its DNA in three ways “to get back on track.”
The first is ‘exigence’, which Peugeot translates as “demanding excellence in everything we do – it’s about quality.”
The second is ‘emotion’ which “is about our interiors, giving them an individual feel.” Customer feedback on the interior of the 3008, the crossover version of the 308, “was really good and that encouraged us to look at interiors in a new way with the 208,” he said.
This resulted in, among other innovations, the small steering wheel and raised instrument binnacle. “Customer satisfaction has been higher and driver feedback much more positive with the 208,” he said.
The third element of the DNA is ‘allure’ – a word that needs no translation but which Peugeot defines as “design and style which are our main strengths. I want to combine quality and emotion in our cars. German cars have quality but not the emotion, while emotion on its own is not enough because you have to have quality as well.
“It takes time to rebuild a brand’s image, but we have seen it can work in the UK where we are back on track.” In that market, for example, 62% of customers for the 208 are new to Peugeot, a figure that rises to 75% for the 2008.
Adding a second shift to meet demand for the 2008 – the waiting list is up to three months – is obviously a fillip for his eponymous company and he says that Peugeot now has “a really clear timeline with figures going in the right direction.”
That includes shifting Peugeot’s reliance on Europe; in 2009 only one third of total sales were outside Europe. This year that figure has risen to 41% helped by sales of the 301, the notchback built in Vigo, Spain and launched at the Paris motor show a year ago, which are 30% above target. The 301 is aimed at buyers in north Africa, eastern Europe and emerging Asian markets.
Part of Peugeot’s revival timeline is the development of the alliance between PSA Peugeot Citroën and General Motors, announced in February last year. PSA describes this as moving forward at a pace “no other alliance has moved at,” with joint purchasing already up and running and delivering savings.
The first of three new models built off a new, shared small-car platform is due in 2016-17 while the two sides are also investigating sharing small gasoline engines.
The unions appear to have responded surprisingly well to the PSA crisis – so well that in early September the group announced that it will build a new family of diesel engines in France largely because of agreement with the unions over flexibility.
This new understanding can be traced back to the decision last year by long-term partner Fiat to pull out of the joint venture in Sevel Nord, near Valenciennes, which builds small vans. Fiat’s place has been taken by Toyota in a new van joint venture, seen as a key signal of the plant’s competitiveness despite labour costs in France of €35 an hour against €22 an hour in Spain.
Sharing the small print of PSA’s strategy with the unions much more than it has in the past has been a key part of the negotiations on a new social contract which are described as “very constructive.” PSA hopes to reach an agreement with the unions by the end of October.
While 2012 was a difficult year – arguably one of the hardest in the company’s 200-year history – Peugeot points out that this year the company has done everything it said it would. “The figures are going in the right direction,” he said.
The company goes so far as to predict that its factories in Europe will be at 100% capacity on two shifts by 2015-16.
And that’s something that would have been unthinkable just 18 months ago.
Tony Lewis
About the author: Tony Lewis is a freelance motoring journalist who has covered the global automotive industry for over 20 years for publications in Europe and the US
