There’s a reminder in the news today of the importance of product in the automotive industry. Yes, market geography accounts for a lot in this business. Being present in markets that are booming is vital, but just being present is not enough on its own. You need to be present with the right products, products that people want to buy. ‘Want’ is a small word with huge implications in an industry as competitive as the car industry. Small changes in what consumers believe about a model or a brand can cause big movements in orders – up or down.
And, as an OEM, you need to have an industrial strategy to produce what consumers want – which will be a combination of the physical qualities and characteristics of the product itself and the projection of the values embodied in the wraparound brand image. Ideally, those two things are aligned in a positive way and become mutually reinforcing: great product and a great brand image. But sometimes they are not quite in alignment. For example, I recall an interview with Ford COO Mark Fields back in 2007. He told me that Ford was suffering from a lag in consumer perceptions. Ford, he said, was at the top of the class on quality, but consumers hadn’t caught up with the reality yet. It’s probably fair to say they have now (and a cynic might add ‘with the help of Toyota’).
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US: Bridging ‘perception gap’ in NA is our biggest challenge – Ford’s Fields
PSA Peugeot Citroen is an interesting one. The company has been through some pretty tough times in the last few years culminating in the recent recapitalisation involving Dongfeng and the French government. And yet, there is apparently no shortage of creativity and new product – particularly from Citroen – just think of the DS sub-brand and the C4 Cactus just shown in Geneva.
It’s important for PSA not to take its foot off the new product development pedal, even when financial losses might create a temptation. Lack of investment in new product might bring short-term costs savings but it can also worsen the chances for long-term survival (the slow death of MG Rover springs to mind). The product has to keep coming in a highly competitive industry like automotive.
For Peugeot, the product range has been swelled over the past decade with niche MPVs and crossovers, but certain models and segments are absolutely vital because of their volume and visibility for the brand. In Europe, that means the small (B-segment) and lower medium (C-segment) hatchbacks. The Peugeot 208 – new last year – has been quite a success in the B-segment, selling well given a very difficult West European car market.
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By GlobalDataPeugeot is now following on with the new 308 (C-segment) – which also appears to have been very well received. I have driven the car and it is a huge step up on the 307 it follows. Is it ‘near premium’ in feel? That is certainly not a preposterous question; quite a bit of thought has gone into the feel of the interior as well as the overall driving experience. It ought to at least get consideration from some buyers in the C-segment who would naturally be inclined to order a Volkswagen Golf, Ford Focus or Opel Astra but would have ruled out the 307 as rather a dullard. There is the possibility to raise the perception of the Peugeot brand again.
FRANCE: PSA to add night shift at Sochaux on strong 308 orders
The really interesting thing about the 308, though, is the underpinning engineering architecture and how that has enabled a host of improvements over the outgoing model. PSA did not scrimp on the investment required for ‘EMP2’ – used across the Citroen and Peugeot ranges. It can now reap some benefits in terms of better new product rolled out off that new flexible platform – which should be around for a while. And improved product offerings will serve to reinforce a positive image for the Peugeot and Citroen brands. The required investment has happened so the tools are in place to turn out cost-effective new product. That may help to explain why Dongfeng took a look at PSA and thought it worth partnering with.
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Peugeot SA (Inactive)