Peugeot boss addresses rumours

Motoring journalists around the country began hearing whispers last week that Sime Darby was planning to cease distribution of its two French brands – Peugeot and Citroen – in Australia.

The rumours surfaced just the day before the launch of the 2008 SUV last week. If true, the rumours could have a destabilising effect on the brands, possibly driving prospective Peugeot and Citroen buyers elsewhere.

And if the rumours are being spread by a competitor to Sime Darby – and at least one private distributor has already denied to motoring.com.au that it's behind the 'disinformation' – that could be counterproductive for the rumour-mongering company. A new distributor may have to spend an excessive amount to repair the brand damage done by entrenched consumer speculation.

No one other than the source of the rumour knows the identity of the source, or the rationale for the rumour, which could damage Sime Darby's standing, the market appeal of the PSA brands, and even the hip pocket of loyal customers.

Sime Darby's response
The local distributor is committed to the local launch of two new Peugeot models in 2017, says Kai Bruesewitz, the brand's General Manager in Australia.

The clear implication is that Sime Darby, the company distributing Peugeot cars (and Citroens) in Australia, is staying the course with the business, contrary to those nagging rumours.

During his presentation to media attending the 2008 launch Bruesewitz offered a "quick business update".

"Let me first comment about the rumours out there [about us] selling the distribution business," he said.

"Sime Darby Motors is not defending [against] any speculations or any rumours to its businesses. Our focus in 2017... is to focus on the new 2008 and also the models to come this year in the SUV range – the 3008 and the 5008. We have great expectations for those."

Explaining, in his view, how the rumours gained currency, Bruesewitz admitted that the business was in a troubled state last year.

"In 2016 we took the time to clean house," he said. "That is, we focused on ensuring that the stock we held on the ground did not impede the roll-out of new models scheduled for this year, as I've just mentioned.

"Clearing the decks ensured we had a clean plate for models launching in 2017...

"In fact, we roll into 2008 and 3008 SUV launches with minimal to no legacy stock, which is a fortunate position to be in."

Eight-year warranty and driveaway pricing were two factors that helped the distributor reduce "on-grass stock" by 60 per cent the Peugeot exec revealed.

"We enter 2017 lean and ready to launch a range of new products…"

In conversation later, he admitted to motoring.com.au that the 308 was overstocked, "because it was the volume seller" and Sime Darby had over-ordered Europe's car of the year for 2014.

"The price was not right," Bruesewitz acknowledged. "We spent a lot of money making the price right."

Another element that led to the glut of 308 stock was the closure of the Peugeot retail outlet in Parramatta retail outlet, Bruesewitz also observed.

Asked also whether he had identified who was behind the rumours – and why – he admitted to having his suspicions, but nothing he was prepared to say on record.

"I'll leave that to your interpretation," he said.

Interesting to note, however, that in refusing to dignify the rumours by addressing them directly, he didn't categorically deny there was any truth to them. If Sime Darby does offload the two French brands – in a business environment that's tough for private distributors – the company will likely wait to build up sales and revenue first. That follows, in the context of the new product confirmed by Bruesewitz to join the range in 2017.

The background
Sime Darby has been the local distributor for Peugeot since October 2001, when it acquired the franchise from Inchcape, the company that distributes Subaru in Australia. More recently the company was given the imprimatur of PSA (the parent company for Peugeot and Citroen) to distribute the Citroen brand in Australia.

The company left out in the cold by this move was Ateco Automotive, which had acquired the Citroen business from former distributor Franzcars at the end of 2000. Under Franzcars Citroen had consistently averaged fewer than 500 sales a year, according to VFACTS records back to 1996.

Ateco lifted annual Citroen sales to new records in Australia, peaking at 3803 units in 2007. The following year the Global Financial Crisis arrived, leading to a massive sales slump, losing 1100 units by the end of 2007. Sales have not recovered since. They have in fact steadily declined, failing to revive under the distribution of either Ateco or Sime Darby. As of last year just 965 Citroens were sold in Australia – the worst performance since Franzcars' final year of distribution in 2000.

The sales trajectory for Peugeot has echoed Citroen's in Australia. In 1996 Inchcape's dealer network sold 1948 for the year. Sales climbed in '97 and '98, but rode a roller coaster for the next few years. In 2002 – Sime Darby's first full year in charge of local Peugeot distribution – sales nearly doubled from 3452 in 2001 to 6630. Sales continued to grow under Sime Darby's stewardship before reaching a peak of 8807 in 2007.

Once again, the GFC drove down sales of the Peugeot brand in Australia, with the tally for 2016 falling as low as 3129.

Sime Darby's miscue with 308 inventory notwithstanding, the problem for the two French brands sales success in Australia doesn't appear to be related to the distribution. The distributor has been expanding the dealer network gradually, and there's now a Peugeot retail presence in Melbourne's western suburbs (Werribee), for instance.

But compared with the commercial success of a third French brand – Renault – the PSA brands are clearly not cutting through. Renault got off to a bad start after the factory decided to reintroduce the brand in 2001. Sales hovered around 2000 to 3000 units a year for the best part of a decade, but from 2012 sales rose to 5011 and quickly achieved escape velocity, rising to 7016 the following year, and 10,014 in 2014. The last two years Renault has posted sales figures above 11,000 units – more than double the number of Peugeots and Citroens combined.

What's the difference? Renault's recent spate of success is generally considered due to its current management team, its sharp focus on its sports models and its strong commercial vehicle sales drive.

Despite its best efforts Sime Darby's management team hasn't been stable in the recent past, although Kai Bruesewitz's recent appointment is a good sign. And the company has tried selling commercial vehicles in the past through the Peugeot dealer network, but rarely sold more than 200 units of the Partner or the Expert vans in a typical year.

Rumours and speculation aside, Sime Darby appears to be well placed for the future, with PSA's financial problems behind it – and anticipating the acquisition of Opel from GM. There's better product in the pipeline and the local management team seems to be finding its feet in the market.

All the company seems to need for a resurgence is its revitalised product range – and a means of conveying its message to Aussie consumers.