Citroen Targeting China With Upmarket DS Marque

TURIN – The focus at Citroen is on growth, both in terms of its new products and new markets led by China.

Reinventing itself “is a choice; it is a must; it is a strategy,” says Frederic Banzet, general manager of the brand.

The French automaker is taking two paths toward the future: expanding the range of the DS premium sub-brand and adding the Cactus C4 CUV to its mainstream C line.

The DS path leads directly to China, where the sub-brand will be given fully independent status, with other markets to follow. Citroen says global sales fell 1.7% in the first half and 1.0% in the third quarter but third-quarter deliveries, combined with those of sister brand Peugeot, jumped 28% in China.

WardsAutodata, which does not separate Citroen and Peugeot sales figures, shows the automakers’ global deliveries fell 7.8% in 2012 from prior-year.

Citroen and Chinese automaker Changan jointly developed the DS5 premium SUV that launched this fall in China. An all-new DS4 midsize sedan is due out later this year. By the end of 2014, Citroen also will offer another Chinese-built SUV based on the Wild Ruby concept unveiled last spring at the Shanghai auto show.

“The Citroen-Changan joint venture has already signed up 25 dealerships in China, and 15 more will be added by the end of this year,” Banzet says.

New regulations in China call for international joint ventures to establish separate sales and service networks. Citroen has responded by designing its DS dealerships to reflect the brand’s exclusive identity, suggesting a boutique jewelry store in Paris.

“We have turned a constraint into an opportunity,” Banzet says. “A French and Parisian soul is essential in anything DS does and represents.

“The French factor of the brand is extremely important, and we can bring something real to the public beyond mere marketing and communication. The showroom must relate to the design and materials details of our cars…details that speak of the French inspiration.”

The exotically styled C4 Cactus that joins the entry-level C4 model range next year “is the manifesto of the company’s new strategy…a new philosophy that somehow takes Citroen to its origins with the aim of being truly French and yet truly global,” Banzet says.

Roughly the size of the Volkswagen Golf and Ford Focus, the Cactus delivers value, simplicity and user-friendliness. Its looks may not win universal acceptance. But, says Banzet: “It will attract a share of enthusiast buyers,” Banzet says. “We do not want our cars to be average.”

The executive is optimistic about the expanding Chinese market compensating for losses in Europe. “I have good hopes that by the end of the year we achieve that,” he says. Our sales were up 32% through the first half this year, almost twice the 16% overall market increase, and we expect to do even better with the new programs.”

Barzet is resigned to continued market sluggishness in European Union countries.

“We tend to believe we have hit the bottom and we can see recovery, yet we are still forecasting the EU market to be in red for the whole,” he says. “It is down 7% for first half, but improving to close at some 4% for the whole year. As for next year, we do not foresee a huge rebound, but likely a little growth.

“If we consider sales outside the EU, we might indeed compensate the losses at home…our sales went down some 7% through the first half. These went down primarily because they were affected by C3 production delays and the consequent delayed launch of the C4.”

Banzet says conditions are improving in the second half, and Citroen might finish with a 4% decline in full-year sales.

“We also have to consider the market decline in Russia, which is affecting the market segment we have just entered with our new models. There is a price war that we do not want to enter.”

Citroen is gaining in sales volume and share in other emerging markets including Latin America, Turkey and Algeria, Banzet says.