Part one: Recent reports suggest PSA are considering a return to the US market. Are they out of their minds?
If it isn’t chiseled in stone somewhere, it probably should be. Because if you want to make a success of the auto business, you really do need a viable (and profitable) presence in the United States – it’s simply too big, too diverse and too lucrative a market to ignore. Conversely, it’s also amongst the toughest to break into. Casualties are inevitable, even for the more successful entrants; an unintended acceleration issue here, a diesel scandal there, but you only have to track the fortunes of the auto-absentees to understand the price of retrenchment.
You disagree? Well, take Fiat for example. For decades locked into a straitjacket of being a small car specialist heavily dependent on its home market, Fiat consistently failed to develop a profitable base with larger cars. Their specialism meant they were well placed in times of austerity, but made them over-reliant on volume over profit. But had they gone about their late Sixties/early 70s US ambitions with sufficient conviction, they could conceivably have developed a broader model spread, one better able to withstand the night-follows-day cycles of domestic market boom and bust. Only latterly has it seriously diversified into large-scale production of more upmarket cars aimed at the US market, the very survival of Italian volume car manufacturing now resting on its success.
But if it was easy, wouldn’t everyone be doing it? Because it goes without saying that going about it the wrong way is really no better than not going there at all. And if anything, breaking America is more difficult for a ‘volume‘ producer than it is for an upmarket ‘specialist‘. For instance, Renault’s alliance with struggling US carmaker, AMC did neither business much good. Renault lost money and lost focus, eventually cutting its losses and selling out to Chrysler in 1987.
Alfa Romeo limped along until 1995. Citroen haven’t been Stateside since their early-’70s ambitions deflated. The less said about Rover’s Sterling fiasco the better. The roots of failure have tended to lie in poor planning, unsuitable product, a lack of durability and disinterested dealers. Add in distribution issues, parts availability and dealer spread, combined with possibly the most demanding customer base on the planet and failure is the most likely option.
Of the European marques who packed up and left, Peugeot perhaps have come closest to making a decent stab at the US market. During the 70’s and 80’s its range of conservatively styled, well engineered medium sized saloons and estates appealed to the sort of American buyer who presumably now keeps Subaru in business. Peugeot’s 504 and 505 models were well regarded and proved reasonably durable in a country where extremes of climate are the norm and the idea of preventative maintenance is often rather loosely applied.
But one senses PSA’s heart really wasn’t in it and by 1991 with only the shoddily-built 405 to offer, sales plummeted and after 33 years, Peugeot slunk away from the land of the free with an almost palpable sigh of relief. With sales elsewhere easier to win, PSA has subsequently grown its business interests in regions as far afield as Latin America, India and most significantly of late, China. But time and geopolitics wait for no man so on one hand facing a potentially catastrophic contraction in China and a reawakened market in Iran, PSA’s Carlos Tavares is reported to be casting his eyes West again in the hope of finding a more stable berth for his ‘Back in the Race’ ambitions. Can he really be serious?