The Paris Auto Show kicked off a little over a week ago. I had the privilege to attend it and interview marketing reps from most French manufacturers. This is the first in a series of articles dedicated to the Paris Auto Show. We start with DS, since last June a stand-alone upscale brand aimed at topping off PSA/Peugeot-Citroen’s range. Since its launch in 2010 as a sub-brand of Citroen, DS sold 500,000 vehicles, 90% of which in Europe, but its European sales have started plateauing in the absence of any new model launch. PSA has advertised the brand’s aggressive launch in China where the DS5 along with two China-only models, the DS5 LS and DS6 SUV, are currently produced.
As I detailed in my STRATEGY series “What future for French manufacturers?”, turning DS a stand-alone brand makes strategic sense, but a very consistent and aggressive marketing, engineering and R&D push will be required in the long run to have any chance at seriously competing with Audi, Mercedes and BMW – a long-term goal for the DS brand. I interviewed Arnaud Ribault, the new Global Sales and Marketing Vice President for the DS brand, previously DS General Manager in China. Surprise, what started as a rather standard conversation about the sales performance and future prospects of the DS brand rapidly turned into a bewildering and quite amusing game of reading-between-the-lines guess work, with two main pieces of information somewhat contradicted by DS CEO Yves Bonnefont…
Extracts of the interview translated from French into English below.
BestSellingCarsBlog: DS is now a stand-alone brand separate from Citroen. What are its concrete next steps in Europe?
Arnaud Ribault: As you said we separated the two brands, do you know why?
BSCB: I do, but happy to hear it from you…
AR: I’d like to start with this, even though you clearly know all the details. We launched the DS 3 in 2010 and the DS 4 and DS 5 in 2011, these 3 vehicles formed Citroen’s premium range. In parallel in China we launched DS as a stand-alone brand in 2012. We now take stock of these two parallel experiences and, you should be seeing it in your sales figures, we have sold 500,000 vehicles in 4 years.
BSCB: Including over 100,000 in 2013…
AR: Including 123,000 in 2013 exactly.
BSCB: …in slight decline year-on-year.
AR: In slight decline indeed. China’s share of DS sales will go up, it currently stands at 16% over the first half of 2014. Interestingly, 62% of DS buyers come neither from Peugeot nor Citroen, so DS has primarily been a conquest sub-brand so far and positions itself above mainstream brands. We have a road map for the future that aims at lifting the brand’s positioning further up. We have the heritage of a brand born in Paris, that’s the 1955 Citroen DS, the DNA of the brand. An heritage but not the same look, the same DNA. Heritage, refinement, technology, style and DS DNA: 5 words, and this exceptional potential for PSA to launch its very own marque.
BSCB: So what’s next for the DS brand?
AR: We already have an interesting brand experience in China. The difference between a sub-brand and a brand is the customer experience. A brand experience needs to be exhaustive: the digital experience, the dealership, the car of course. So: product, distribution, digital, communication. These are the 3 axes on which we are going to accelerate the development of the brand. On the products: today we have 3 products in Europe (DS 3, DS 4, DS 5) and 3 local products in China (DS 5, DS 5LS and DS 6). Tomorrow we’ll converge the range to 6 global products to establish the DS brand.
BSCB: What do you mean by tomorrow?
AR: We don’t give any horizon.
BSCB: There’s no horizon?
AR: No we don’t give any horizon. Well we have an horizon internally obviously, but we don’t communicate on it (Editor’s note: DS CEO Yann Bonnefont confirmed the day after this interview that DS will produce 6 global vehicles from 2022 onwards). We also have another road map: by 2020 we want to get to a pricing power that is close to the German brands.
BSCB: By then you’ll have 6 global models?
AR: I didn’t say we’d have 6 models by then. But you can imagine that to reach that target we’ll need to make our range evolve.
BSCB: So there won’t be any difference between the European and Chinese DS ranges?
AR: It will be the same range.
BSCB: The DS 3, DS 4 (or their replacements) will be produced in China, and the DS 6 (currently exclusive to China) will launch in Europe?
AR: What I can tell you at the moment is that after analysing the global car market and looking at consumer demand, long-term trends and profit pools, we have decided to limit the DS range to only SUVs and sedans.
BSCB: You will be killing the DS 3 hatchback?
AR: No I didn’t say that, but it could be raised somehow, SUV-like. (Editor’s note: based on this answer, the replacement for the DS3 could be inspired by and/or have commonalities with the China-only Citroen C3-XR unveiled two weeks ago in Paris).
BSCB: And you will launch a DS sedan in Europe, even though their popularity is decreasing there compared to China?
AR: I don’t share your point of view. Europe likes premium sedans to a certain extent.
BSCB: You will be launching the DS 5LS in Europe?
AR: We won’t be launching the DS 5LS nor the DS 6 in Europe, because these two models have been developed with automatic gearshifts and petrol engines, so they will be launched in markets that prefer that type of vehicles, and Europe is not one of them.
BSCB: So what will your range be?
AR: We are going to renew completely the range into 6 global vehicles that will have little to do with what the DS range currently is.
BSCB: Your global strategy targets cities, not countries… (See STRATEGY: Citroen’s DS premium brand targets cities, not countries)
AR: Yes, in Europe we want to focus on growing our presence through DS Salons which are integrated into existing Citroen dealerships. By 2020 we would like to cover the 200 wealthiest cities in the world with DS-exclusive dealerships called DS stores. Out of these, 30 are in the United States, so we have removed them because we are not going to sell cars in the U.S., making it 170 cities. (Editor’s note: The day after this interview, DS CEO Yves Bonnefont told Automotive News “We want to make DS a global premium brand, and you cannot be global without the U.S. A decision to return to the U.S. will come in 2017 at the earliest, and U.S. sales would not begin until after 2020.” As a reminder, Peugeot pulled out of the U.S. in 1991. See PSA plots U.S. re-entry with DS brand).
BSCB: In China, DS dealerships are already separate from Citroen. How fast will you grow your network there?
AR: At the moment we have 66 DS dealerships in China, we are looking at one hundred at the end of 2014 and 130 by end 2015. We started with Eastern cities, then Chengdu and Chongqing, then Tier 1 to 4. These are our priorities, and for Tier 1 cities we already have multiple dealerships: 4 in Shanghai, 3 in Beijing with a 4th one opening there shortly. The biggest growth will come from Tier 2 cities where a lot of ‘new mainstream’ households live. These are households that earn between $15,000-30,000/year. They are currently 23 million in China and will be 171 million in 2020. As a comparison there are around 40 million of these households in the U.S.
BSCB: Will your main global focus remain China?
AR: Yes, at a parity with Europe. We predict that 50% of our sales will come from China in a few years, and the rest from Europe, with the rest of the world accounting for a few percents.
BSCB: Do you have long-term sales volume objectives for the DS brand to be sustainable?
AR: We work on different scenarios, but we don’t have mid-term volumes to communicate for the DS brand.
Interview conducted on Friday 3 October at the Paris Auto Show.