Part one: With the jury on PSA’s luxury line coming to some less than palatable conclusions, is Carlos Tavares in the mood to listen as the DS project sputters and pops.
When PSA launched the DS line in 2009, many observers viewed it as the final throw of the dice for Citroën. Suffocated by a value strategy that saw ever-decreasing returns, the ailing brand icon appeared on its last legs. Critics and Citroënistes alike condemned PSA’s plan as madness, yet early sales both in Europe and latterly China saw many of us eating sizeable chunks of humble tarte. Indeed so bullish was PSA Chairman, Carlos Tavares last year that DS was divorced from Citroën as a stand-alone marque.
Tavares certainly appears to have worked wonders on the core business; a recent investor report from analyst, Max Warburton of city firm Sanford C Berstein suggesting PSA’s prospects are coming up roses. Warburton – (no stranger to these pages, he) – presented some well founded views on PSA’s long-term viability. The good news being Tavares has successfully turned PSA’s business around, on current form the most profitable of the mass market European players. Having softened them up however, he delivered his coup de foudre, informing investors; “One of the key tenets of PSA’s long-term strategy is to develop ‘DS’ as a third brand and as a ‘premium’ offering. We believe this is misguided. PSA already has two brands; it doesn’t need and can’t afford a third. DS is ill-defined, has low consumer recognition and is highly unlikely to generate shareholder returns.”
This could easily be dismissed as the self-interested witterings of a spreadsheet geek with little motor industry knowledge and a bunch of voracious investors to mollify, but as Hilton Holloway points out in his recent Autocar piece, Warburton’s industry knowledge is perhaps unrivalled. If this wasn’t bad enough, the entire validity of the DS project must now be placed under the sternest scrutiny given significant sales reversals, not only here in Europe, but also in the (for PSA) vital Chinese market.
Despite a strongly recovering European auto landscape, DS’ sales are on the slide from the heights of 2012 when 117,374 were delivered. Last year saw European sales fall to 75,163 cars, a drop of 64%. Drilling down, the top-selling DS3 model peaked in 2011 with sales of 72,876, but managed only 45,665 deliveries in 2015, which by anyone’s reckoning is 62% less. It’s a similar story with the C-segment DS4. Peaking in 2012 at 30,214 units, last year their crossover-y thing managed to find 17,610 lucky owners.
The story for the DS5 is even worse. From the model’s peak in 2012, 11,888 delivered across Europe last year can hardly be called anything but a collapse. This on the back of recent brand-defining facelifts to all three models. China too offers little comfort; all European brands facing the grim prospect of falling demand and shrinking profits, all of which must be giving Tavares and his minions a serious case of the willies.
Were the naysayers right all along? It’s tempting to say they were, especially since PSA have consistently mangled DS’ execution, which was undercooked to start with. In the next part, we’ll look in more detail at Warburton’s claims for DS’ and ask if Tavares can afford to carry on regardless?
Note: The text has been altered to reflect Jan-Dec sales figures. Sales data via left-lane.com/PSA/