Trans-Siberian Railway 2013: Peugeot launches in Mongolia

Peugeot Mongolia official launch ceremony – July 2013

* Many thanks to Marc Bocque for organising this interview! *

This is Part 17 of my Trans-Siberian Photo Report. You can see all other Parts of this long-term Report here. Coinciding with my stay in Mongolia, French manufacturer Peugeot, after confirming in July an accord with local distributor Baz International (also involved in mining, real estate and cable TV), is in the process of launching for the very first time in the country. The first Peugeot showroom is currently in construction in Ulaanbaatar. To understand the motivations behind this launch I had the privilege of interviewing Eric Mougin, Peugeot Asia Sales Manager and responsible for the imminent launch of the brand in Mongolia.

Local distributor Baz International has expressed strong interest in the Peugeot 208.

The launch of Peugeot in Mongolia is part of its general Asian strategy linked to an expansion in no less than 13 countries in the region, including South Korea, Taiwan, Sri Lanka, Brunei, Nepal, Indonesia and most recently Kazakhstan. Peugeot bases this strategy on the fact that Asia ex-China/India now counts 1 billion inhabitants and is the fastest-growing car market in the world. The manufacturer tables on the opening of its first Mongolian showroom in early 2014 but given the temperatures that affect Ulaanbaatar at that time of the year, the country almost grinds to a halt and the French carmaker doesn’t anticipate any commercial activity here before Spring 2014.

The 508 will be Peugeot’s flagship in Mongolia for now.

The main objective of Peugeot in Mongolia is ‘to be one of the first European brands present at the start of history’ as new car sales start taking off. Peugeot estimate the Mongolian car market at 45-50,000 units in 2013, however only around 10% of these (5,000 at most) are new cars and, as we saw in my Mongolia First Impressions post the large majority are RHD used Japanese imports. Peugeot is counting on the intention of the Mongolian government to regulate used RHD imports more strictly, and believes the new car ratio may climb to 50% within the next 3 years to reach 50,000 units off a 100,000 units total market by 2020.

Peugeot’s initial sales target is modest: 150 to 200 sales for the first full year. The range includes the 208, 508, 3008 and 4008 for the moment, all models will be petrol automatic transmissions imported from France to build on the country’s luxury reputation and Peugeot will be positioned ‘close to the premium world’. No hybrid diesel for now, but given the popularity of hybrids in the country this option is seriously considered.

Can Mongolia ever fall out of love with used RHD Japanese imports?

Now onto my 5 cents worth on the subject. Peugeot is virtually unknown in Mongolia, so it definitely is a good idea to launch now, as it will take time to build a reputation. Not that it will greatly affect Peugeot sales in the country but even if say used Japanese imports become illegal, the Mongolian used car market will reorient itself towards LHD Korean imports and it will take a long time for a market that has been almost 100% used forever to become 50-50 used/new. Simply because most of the population do not have the money to buy a new car. After all, even in very mature markets like France the used-to-new ratio is still 2 to 1.

DS Wild Rubis: a Peugeot variant would get the brand an instant 10% market share in Mongolia!

A badass SUV would be the best way to fast-track Peugeot’s progression in Mongolia, as Peugeot’s range is currently a little at odds with the country’s tastes and roads which is not uncommon for a brand new launch. Apart from (very) central Ulaanbaatar, the roads are uneven at best, impassable at worst unless by old Hyundais with no pretention or a big SUV. However, the country’s infrastructure is improving at lightning speed so no doubt these conditions will be bettered by the time Peugeot is an integral part of the market.

Now. About this Peugeot 6008 concept to be unveiled at the 2014 Beijing Auto Show and built on the same architecture as the DS Wild Rubis… Mongolia is waiting for you!