Peugeot Confirms Plans to Return to North America

PSA Group confirms plans to re-launch the Peugeot brand in North America as part of the second phase of its “Push to Pass” growth strategy.

The French automaking conglomerate, which comprises the Peugeot, Citroen, DS Automobiles, Opel and Vauxhall brands, says it overall will launch 116 new models by 2021 as well as accelerate the electrification of its model range in a move PSA Group Chairman Carlos Tavares (below, left) says is aimed at turning it into a global vehicle manufacturer.

Plans for the Peugeot brand’s return to North America have been in development since 2016, with PSA Group having switched its design and manufacturing processes to ensure all new models are compliant with U.S. regulations. It also has begun recruiting staff for key positions in North America and has been working on a dealership network.

“We made the decision Peugeot will be the brand to take us back to North America. We believe bringing the brand that three times won the Indianapolis (500) is the right thing to do,” Tavares says.

The 60-year-old Portuguese says PSA Group’s entry into “the US and/or Canada” with the Peugeot brand will be achieved in an “unconventional, frugal and creative” way.

Tavares confirms initial Peugeot models for the U.S. are to be imported from China and Europe but does not identify specific models. Nor does the PSA Group chairman offer a definitive start date, saying it will first depend on what happens with the ongoing threat of a trade war.

The first phase of PSA Group’s “Push to Pass” growth strategy, which ran from 2016 to 2018, has been deemed successful, with the company recording its fifth consecutive year of growth last year. Since the strategy was announced in 2016, PSA Group has acquired Opel and its U.K. subsidiary Vauxhall from General Motors.

Under PSA Group, Opel and Vauxhall recorded a profit for the first time in 20 years in 2018.

The second phase of the strategy runs from 2019 until 2021. It aims to extend PSA Group’s global reach with planned entry into new markets together with an expansion of its product range with what Tavares describes as “a focus on electrification and digital technology.”

PSA Group has set a target to increase sales outside Europe 50% by the end of 2021. To achieve that, it says it will not only launch Peugeot in North America but also introduce the Citroen brand to India and return Opel to the Russian market after a 4-year absence.

Europe now accounts for nearly 80% of PSA Group’s global sales, following the purchase of Opel and Vauxhall in 2017.

Peugeot originally entered North America in 1958 but withdrew in 1991 amid dwindling sales and an unsuitable model lineup conceived primarily for the European market. It has maintained a North American presence by continuing to sell cars in Mexico, although models sold there do not U.S. or Canadian requirements, according to Peugeot officials.

The 116 new models PSA Group plans to launch by 2021 include a large percentage of commercial vehicles, which it cites as a key growth opportunity. Among the goals set by Tavares is a reduction in the average age of the model lineup to 3½ years.

Along with commercial vehicles, PSA Group says it aims to accelerate the development of both hybrid and battery-electric models, with a goal of offering at least an electrified version of half of its key models by 2021.

Tavares says the high cost of developing fully autonomous driving systems would likely make them unaffordable for private-car buyers in the near future “unless they could afford to sit in the back of the car anyway.” As a result, PSA Group has decided to focus its development on advanced driver-assistance systems, with fully autonomous driving research to be reserved for shared shuttles and other mobility services.

Among the measures announced by the PSA Group chairman to boost profits is an expansion of its online sales presence. The multibrand company sold 6,000 cars via the internet in 2018 but says it wants to increase that to 100,000 online sales by 2021. It also is actively seeking to shed real estate assets, with a number of factories, including Vauxhall’s Ellesmere Port site in England, said to be under consideration for closure.

PSA Group’s five brands sold a combined 3.88 million vehicles in 2018, up 6.8% from prior-year, with group revenue up 18.9% to €74 billion ($84.1 billion).

Increasing its sales presence in China is a key goal for the French company. Tavares admits PSA Group’s recent sales downturn in the world’s largest car market, where it has operated a joint venture with the Dongfeng Motor Group since 1992, was a “big frustration” and “not acceptable.” However, he also says the situation has left it less susceptible to a general market downturn than its rivals. A new business model is being developed for China, he adds.