Peugeot to Launch Mu Lifestyle Vehicle-Rental Program

PARIS – After an experiment in four French cities, Automobiles Peugeot SA is ready to launch its pioneering mobility service, Mu by Peugeot, in the capitals of Western Europe.

The idea is to organize a service of pre-paid short-term rentals for cars, vans, scooters, bicycles and accessories such as baby seats.

Customers will put money in an account that will let them rent a convertible for a weekend seaside, a scooter to get around the city or a bike carrier, bikes and a people mover for a vacation. And when they book train or airplane travel and hotels through the service, they will earn points on their Mu account.

“We aim at having 15% of new-car buyers, 10% of used-car buyers and 5% of people who already own a Peugeot,” says Jean-Paul Durand, who is in charge of the program.

The service is part of PSA Peugeot-Citroen’s attempt to add €1 billion ($1.5 billion) in customer-service revenues over the next several years.

Most of the increase will come from selling more service contracts, insurance and financing, CEO Philippe Varin tells analysts last month, but part of it will come from new services such as Mu.

Peugeot has tested the idea with 500 people in four French cities – Nantes, Lyon, Brest and Rennes.

In the tests, Durand says, some 40% of the rental activity was for leisure vehicles such as the 3008 cross/utility and the 207 and 308 coupe-convertibles. About 20% went toward renting vans such as the Peugeot Partner, and the rest of the activity was centered on bicycles, scooters and accessories.

Vehicles being rented are generally those used for demonstrations and test rides, says Jean-Marc Gales, who is in charge of brands at PSA.

“Demonstrators are used 10% of a day, and not on the weekends,” he tells analysts. “Mu is not a rental company, it’s not at airports or train stations. It is where our dealer network is located…using stock that is present anyway in a dealership.”

The advantage for the dealerships goes beyond the extra revenue it generates from renting vehicles.

“Before, all we knew about our customers was the car they had purchased,” Durand says. “Now we are learning more about them, that they have bicycles and scooters. We can prepare our offer better.”

Mu by Peugeot is available only to individuals, not businesses. Customers in the test cities told Peugeot Mu goes well with the brand and is not seen as something weird or abnormal.

Two changes were made to the Mu program as a result of customer input, Durand says.

It costs €10 ($15) to open an account. Originally people had to put in another €50 ($73) toward future rentals, but that will be reduced to €10. Many people like the idea of renting a bicycle, Durand says, and €10 is enough to rent one for two days.

The other change was in communication.

People said Mu advertising was oriented too much toward the vehicles available. Now it will be oriented more to what people can do with their Mu card: take a weekend drive to the sea, bicycle in the hills or bring an armoire home from an auction.

Mu, the Greek letter for M, was chosen as a name because many of the words that might have been used – move, mobility, mobile –already have been employed by others, Durand says, and the graphic appearance of the Greek letter Mu in lower case resembles a “u” or an “m” with a tail, suggesting movement.

“We wanted to invent a unique name that is not linked to our selling of vehicles,” he says.

The idea of such a service has been discussed in theory for years.

When Smart first arrived, there was much talk around the idea of having a little car for the city and renting a big one for weekends in the country, “but it didn’t come together,” Durand points out.

Peugeot ran Mu in its test cities through company-owned dealerships, and many of the dealers in Europe’s capital cities will be company owned. But private importers and dealers are also involved.

The first three cities on the list are Paris, Berlin and Amsterdam. In Amsterdam, Mu will be operated by the private importer for the Netherlands. In Paris, Mu will be available at seven car dealerships and 15 scooter-bicycle shops.

Gales says Mu will increase both traffic at dealerships and loyalty to the brand, as well as generate revenue.

“Services are going to be more necessary,” he says. “Those customers who use our bank are more loyal than customers who pay cash. It is absolutely vital to move ahead in services.”

However, he adds, “Mu by Peugeot won’t change the equilibrium between automotive and service (revenue) for many years.”