Peugeot is slated for a return to the United States market by 2023, according to PSA North America chief executive Larry Dominique in his address to Center for Automotive Research, according to The Detroit Bureau. PSA North America is still in the midst of building a retail network for Peugeot, which last sold vehicles in the United States in 1991, the report said.
The challenges faced in the French brand’s rebuilding for the North American market has been compounded by the Covid-19 pandemic, which has placed further pressure on the traditional dealer network, said Dominique. PSA will continue to use franchise dealers for this market, though it is expected to rely heavily on online retailing, said the PSA North America CEO.
Customer satisfaction from traditional automotive retailers isn’t great, particularly when compared against other businesses, Dominique said. However, a range of surveys have shown that buyers are increasingly leaning towards buying vehicles on the internet, he noted.
The margins of new car sales are very small, says Dominique, and they are ‘basically at zero’ before automakers add incentives, thus boosting the margin to around 2.3%, the CEO said. Compounding the difficulty is the growing movement of car brands pushing its dealers into building larger and more expensive dealership facilities to very specific standards.
“In one case, you even had to order a certain kind of marble. To this day, we’re still building huge dealerships costing tens of millions of dollars, exacerbating the very fixed cost absorption model that exists today,” he said. This was happening at a time when research shows that consumers are looking for a simpler and more efficient process, which is an example of ‘disconnect, or lack of reality’, said Dominique.
This is part of PSA Groupe’s 10-year plan to re-enter North America, where it would first enter the market as a ‘mobility services’ provider, and should that business prove successful, move on to introduce its own vehicles into its car-sharing services.
A merger between PSA and FCA of equal stakes was announced between the two groups of companies last year, and both companies have announced that the new company formed will be called Stellantis. The Stellantis name will be used exclusively as a corporate brand name, it was announced, while the names and logos of the 14 brands that comprise the merged groups will remain unchanged.
Both companies have expected the completion of the merger to take place in the first quarter of 2021, and this is subject to customary closing conditions, which includes approval by shareholders as well as antitrust and other regulatory requirements, it was announced last month.