Peugeot Citroen returning to the U.S.?

March 14, 2016

In the wake of the Great Recession, America lost some important (and not so important) auto brands. Volvo and Saab were sold, Suzuki and Isuzu bowed out of the U.S., and other marques, including Hummer, Mercury, Pontiac, and Saturn, were simply shuttered.  

Those changes upset more than a few auto fans, but others were excited by the return of two brands that hadn't been sold in America in years: Fiat and Alfa Romeo. Now, Auto News says that those Italian marques might be joined by competitors from across the Alps: Peugeot and Citroen.

Gearing up for world domination

Like many automakers, PSA Peugeot Citroen has had its share of troubles since the Recession--troubles compounded by Europe's  touch-and-go financial recovery.  The company has spent years tightening its focus and regaining its footing via its "Back in the Race" restructuring program.

To complicate matters, the automaker has had to manage that at a time when the auto industry is undergoing dramatic changes. Hybrids, electric vehicles, ride-sharing, car-sharing, mobile phone integration: these and other trends make for a very different automotive landscape. Adapting to this new normal would be challenging in the best of times, but doing so while running deficits would seem nearly impossible.

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And yet, PSA Peugeot Citroen has done it. The company is profitable once more, and it's planning to expand operations. Two of the countries it has in its sights are the U.S. and Iran. 

Why here, why now?

Moving into the Iranian market would seem a no-brainer. The country has been underserved by Western businesses for some time, and in its urban centers, label-conscious young people are likely a good match for the company's vehicles.

But why America? Why take on one of the most competitive auto markets in the world when some analysts feel that sales are about to plateau? Why relaunch U.S. operations at a time when most car companies are doing everything they can to work leaner and meaner?

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The simple answer, as you might expect, is money.

Even if U.S. sales peak around 17 million per year, that's still 17 million opportunities for PSA Peugeot Citroen to plant flags on U.S. soil. Furthermore, through its Peugeot, Citroen, and DS lines, the company offers a number of vehicles that may appeal to crossover-hungry American consumers.  

Can it work? 

PSA Peugeot Citroen has a number of hurdles to overcome.

On the one hand, it has no manufacturing facilities in North America, and of course, no dealership network. Making its cars affordable and getting them into the hands of consumers will be difficult/impossible without those two in place.

Also, most Americans aren't too familiar with the Citroen or Peugeot brands. Citroen ended U.S. sales in 1974, and Peugeot followed suit in the early 1990s. Neither brand ever gained widespread popularity, and those who remember them likely consider them a novelty.

The DS line will have an even tougher time because it's almost entirely unknown here, except by Euro car fans. The upscale brand didn't launch until 2009

On the other hand, PSA Peugeot Citroen does have a partnership with General Motors that might--might--be leveraged to some advantage. For example, the two automakers might be able to share production facilities. 

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Also, the higher-end DS line seems like it could be attractive to U.S. luxury fans. DS models are small, yes, which wouldn't play well everywhere, but they're not as small as some European vehicles on U.S. roads (e.g. Smart). Whether the company would keep the DS name we can't say. It's a storied and beloved and somewhat clever marque in French--a play on the word "déesse", or "goddess"--but it could leave Americans shrugging their shoulders.

And there's one more thing weighing in PSA's favor: while neither Peugeot or Citroen were known for being especially reliable, they weren't always the butt of jokes like some other European brands mentioned above.

PSA Peugeot Citroen will make its expansion plans public next month, on April 5. If we were the betting type, we'd guess that the company might begin by introducing the DS as a hard-to-find, niche luxury marque (in the same way that Maserati and Alfa Romeo are).

Based on how those sales go, the company could then add Peugeots and/or Citroens to the lineup. Whether Grace Jones might be recruited to be a company spokesmodel remains to be seen.

Would you buy a Peugeot, Citroen, or DS? Would you run the other way? Does this sound like a viable plan or just le pie in le sky? Share your thoughts in the comments below.

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