Another Update to the Peugeot/Citroën North American Return Strategy
At the North American International Auto Show in Detroit, PSA CEO Carlos Tavares announced that the company has “people working on cars now” for the U.S. market. Tavares went on to say that as part of PSA Group’s return to North America it is asking some Opel engineers based in Ruesselsheim, Germany, to return to their roots. To make its latest products compliant with U.S. regulations and as part of a 10-year plan to sell vehicles in North America, the company is using Opel, a brand acquired in a $2.5 billion takeover of the Opel and Vauxhall brands from General Motors last year, to take the first steps to enter the U.S. market.
“Our engineering teams, using some of the Ruesselsheim engineers, are making our next generation of products U.S.-compliant, not just from a regulatory standpoint, but also with consumer tastes” Tavares said. “That work started a few months ago and has been boosted by the fact that we’re now using the Ruesselsheim engineers who have been working for GM for so many years.
PSA is researching the U.S. consumer market to decide which brand to lead its return selling vehicles in North America by 2026, Tavares said. As it has done in Russia and Latin America, PSA will start with low-volume sales to ensure short-term profitability.
“Our success in Europe could lead to a very arrogant position that I want by all means to avoid,” Tavares said. “Entering the U.S. will only be an upside for the value and the profitability of my company. My only focus in the U.S. is to do the right things right.”
To succeed in North America, PSA is starting at the engineering level, relying on engineers whose job had been to homologate U.S. vehicles for the European market.
At the same meeting with reporters, Larry Dominique, CEO of PSA North America, said the company has hired Ben Winter, formerly of Ford and Fiat Chrysler Automobiles, as its chief technical officer. He will be responsible on the U.S. side for working with the engineers in Ruesselsheim.
Other new hires include Lynn Blake, vice president of mobility. She is a former Nissan colleague of Dominique and Tavares.
Vincent Noirbent has been transferred from France as Vice President of Corporate and Product Planning. Dominique described him as PSA North America’s conduit into the parent company.
As for Opel itself, Tavares said he can revive the brand using the same tactics the former Renault-Nissan Alliance executive used in the turnaround of PSA in 2013 – tightening up manufacturing operations and giving engineers “room to breathe.” However, that extra breathing room comes with additional responsibilities. Tavares hopes that by tasking Opel engineers with the reverse process of readying European vehicles for the North American market, PSA can advance its global aspirations while developing a potential source of additional profit.
“For us, it’s a great opportunity to merge their skills and their expertise to prepare the cars for the U.S. market,” Tavares said. “If you want to be a global player, you have to be there.”
Along with U.S. regulatory compliance, PSA is preparing for globalization with its Free2Move mobility platform, which allows customers to use multiple mobility services (such as Zipcar and Car2go) on one app. In addition to the app which was launched in the US last fall, PSA will add its own mobility services, including a car rental service, to the platform this year.
Next, Tavares said, will come ride services using PSA cars. The third step will be to sell PSA vehicles in the United States designed by Opel engineers who worked for GM. The company plans to start meeting with auto dealers in the U.S. this year as it considers how it will distribute its vehicles, Tavares said.
Tavares said all models from each of PSA’s five brands will offer an array of power systems including at least one electric vehicle. It was not clear whether those would be fully electric or gas-electric hybrids or what would be available here.
In addition, Tavares said Peugeot will announce soon a deal to establish additional manufacturing capacity in Southeast Asia. He did not elaborate during a question and answer session.
Tavares also sidestepped a question from Crain Communications group publisher KC Crain about whether he would be interested in acquiring brands from Fiat Chrysler Automobiles NV. Tavares joked that Fiat Chrysler Chief Executive Sergio Marchionne should call him, but then said that he has enough on his plate “for the time being.”
PSA has yet to announce a location for its North American headquarters. We still suggest Las Vegas as the most appropriate city reflecting what we feel is the gamble the company will be taking on its return.