Nearly three decades after exiting the U.S. market, PSA Group is coming back with the brand it pulled out: Peugeot.
The French auto conglomerate will reintroduce Peugeot vehicles as part of a 10-year plan to sell cars again in North America, CEO Carlos Tavares said in Paris on Tuesday. They will originally be sourced from Europe and China, Tavares said, without identifying any nameplates.
Larry Dominique, PSA's North America chief, told Automotive News that Peugeot is the "best fit" for the North American market, based on consumer awareness of the brand and emerging demographics.
"There's over 1,500 Peugeots still registered and running in the U.S.," Dominique said. "Ironically, the highest concentration is in Alabama."
Since announcing its planned return in 2016, PSA has maintained that any of its brands — including Citroen, DS and, more recently, Opel — might lead the comeback to the U.S. and Canada.
Peugeot exited the U.S. market in 1991, driven out by a recession, slumping sales and the rising costs of U.S. regulations. The company had sold just 4,292 cars in 1990, nearly 80 percent below 1984 levels.
"Even though Peugeot left in 1991 ... the awareness of the brand and the opinion of the brand are still strong," Dominique said. "So, we have a strong starting point with which to start the discussion with consumers."
Dominique declined to elaborate on the North American product road map, distribution and retail models, or even when Peugeots might be available. But Tavares did say that rather than rebuilding a traditional dealer network from scratch, the group has identified a "creative and disruptive way to distribute our cars."
Slow and steady
"With a greenfield opportunity, we can think about the business in a very different way," Dominique said. "How can we be more asset-light, how can we be more agile, how can we embrace this new digital economy, while delivering the kind of experiences that consumers expect?"
Last year, PSA said it had narrowed to 15 states and four Canadian provinces its top picks as possible points of entry for sales. Those states have customers who are willing to buy imports and represent 62 percent of the nation's vehicle sales, PSA said.
"Taking the time to do it the right way — launching the product when you're ready, building the business and scaling it as you develop success, is the way we want to approach the market," Dominique said. "That way you don't make the mistakes a lot of companies do, by rushing in, over-leveraging and then having to push metal, and that's not a sustainable business."
PSA is in the process of homologating (the term used for approving car sales in particular markets) Peugeots for the U.S. market, which is a multiyear process. "We have given ourselves a 10-year horizon, starting in 2016, in which to launch retail in North America," Dominique said. "If we can do it earlier than that, we'll do it when it's appropriate."
Dominique waved away the idea of eventual U.S. production.
"We'll consider industrialization when it makes sense based on the volume we're selling in America," he said. "The last thing we want to do is push the cart before the horse. We'll think more about it when we start selling cars and the volume grows to a point that it makes sense."
PSA's initial approach to selling cars again in North America is through mobility. It launched the Free2Move app in Seattle in fall 2017. The app lets customers order and pay for a variety of transportation services, such as ride-hailing or public transit, with one mobile app.
Free2Move also is the brand PSA used to launch a car-sharing service in Washington, D.C., late last year.
"We've got growing revenue every single day," Dominique said. "The team is doing a great job of managing the operational cost, being very efficient."
Free2Move is providing PSA with a trove of data on consumer preferences, driving habits, and use of alternative transportation, such as use of ride-hailing, public transit, scooters and bikes. The major challenge is growing the user base, Dominique said, noting the service has more than 1,600 users in D.C.
"We are making progress every day," he said. "We are lowering our cost of acquisition every day."
Urvaksh Karkaria is a reporter for Automotive News.