Is PSA chief right in betting on DS premium brand? image

Carlos Tavares, the chief executive officer tasked with rebuilding almost from the ground up PSA Peugeot Citroen, the second largest automaker in Europe, has one rogue element – is the DS premium brand really as successful long-term bet?

Trailing by far the Volkswagen Group as the second biggest carmaker in Europe, PSA has been on a turnaround strategy since last year, when the company was rescued through a capital expansion plan that brought on as major stakeholders China’s Dongfeng and the French government. PSA opted as part of its revival strategy to differentiate the DS upscale models into a separate brand after the nameplate was only revived about half a decade ago. The target is simple – the DS brand can appeal to customers who associate it to the iconic DS models made by Citroen in the 1950 and 1960s. And in doing so it would hit the sweet point of having higher margin cars aimed at affluent customers in Europe and China. But until now, the DS has had little impact on the group’s fortunes: PSA’s worldwide deliveries last year surged 4.3 percent to 2.94 million and DS sales dropped 3.4 percent to just 118,472 units.

Tavares so far believes the DS brand would pay off in the long term, aiming to become a French alternative to the trio of German luxury powerhouses – BMW, Audi and Mercedes-Benz. But industry experts and analysts are growing weary of the brand’s prospects. They say lifting a premium brand from nothing is an incredibly hard task and don’t believe PSA ultimately has the financial power to wait almost two decades to construct a successful luxury unit.

Via Automotive News Europe