Peugeot Wants To Raise Prices To Volkswagen Models Level
|   Friday, May 23, 2014
Carlos Tavares's plan to revitalize the corporation Peugeot-Citroen is called "Back in the Race" and covers the period 2014-2022. Carlos Tavares wants to return the balance of PSA Peugeot-Citroen's economic situation and among the steps they will take to achieve this goal is to increase the number of expensive models in the Peugeot range.

On the basis of the "Back to the Race" plan presented in Paris, Tavares highlighted the need to increase prices of the Sochaux-based company's models by 6.
percent by 2020. This percentage is the average difference between a Peugeot model and its equivalent in the Volkswagen range. The first step will be to reduce the price difference to 4.7 percent by 2016 and then to decrease to three percent or less by 2020.

Tavares, the former number two at Renault-Nissan, says that the models 208, 2008 and 308 are already equal to their equivalents in the Volkswagen range in terms of technology and quality, the difference between them being found only at the level of price.

To increase the trading price of Peugeot models, Tavares has already planned to reduce the range of models to only 16 models from 25 as it has today. By 2022, the Peugeot range will have only 13 models. PSA's boss wants to reduce the overlap between Peugeot and Citroen models and avoid common platforms and components sold with two different logos.

For now, Tavares's plan does not reveal what models will be removed from the Peugeot range but industry analysts provide for the elimination of all models with low profit margin, as well as the models with weak sales or who are in declining segments. Peugeot's range will focus on segments with the highest sales in the world, namely the B, C and D, segments, while hatchbacks, sedans and station wagon will remain a priority for Peugeot.

Analysts estimate that the 3008, 5008, 4008, 207CC, 308CC, 807 models and the 108 will not receive replacements at the end of their lifecycle. While the 108 model will not be replaced because Peugeot wants to give up on low profit margin models, other designs will be phased out as a result of the fact that sales have not reached the expectations of the manufacturer and do not work enough into profitable segments.

While Peugeot will target the upper segment of the market, Citroen will become the mainstream brand of the PSA group, although it too will have fewer models. By 2016, the Citroen range will remain with only 14 products on offer, but the plan is that just seven models will stay by 2022. The good news for Citroen fans is that this reduction does not mean the disappearance of the DS models range, which will be represented by a separate division that will have six models in 2022.

The rationalization of range models will save about 300 million euros per year for PSA, and expand market coverage, declared Tavares.
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