Nick Senior

UP TO 15 per cent of Australia’s Peugeot and Citroen dealers could be cut from the ranks as new distributor Inchcape strives to improve the profitability of its dealer network and make sweeping changes to the business model.

Inchcape CEO Nick Senior said he wants dealers to sell both Peugeot and Citroen brands. Currently, of the 65 dealers selling Citroen and Peugeot, only 18 sell both. Only eight are exclusively Citroen agents.

“We are working through a full network revision at the moment,” he told GoAutoNews Premium.

“That will take a while to complete. The challenges are many. We want an accountable, vibrant but profitable dealer network and that’s not the case at the moment.”

Inchcape took over the Peugeot and Citroen distributorship from Sime Darby Motors Group (SDMG) on June 1. Since then it has been laying plans to accelerate sales and buyer awareness in the two French brands that fall under the PSA Group banner.

“Let’s not underestimate the challenge of what we are doing,” Mr Senior said.

“It (Peugeot and Citroen) has been undernourished and we’re trying to give it some love and care in our new greenhouse.

“But we don’t expect it to grow from a seedling to a 200 metre tree overnight.”

Mr Senior said there was a plan to boost the brands and look after dealers.

“We have agreed to that plan with PSA jointly but we have internal figures that we don’t have to make public,”

“We will operate as one company – Peugeot Citroen Australia (PCA).

“We have situations where we have a Peugeot dealer on one corner and a Citroen dealer on another – that’s not feasible so that will change.”

Within the full network review, PCA would look at dealer requirements, the best locations and, Mr Senior said, “obviously we would also look at things like performance, and so on, before we finish finalising the network”.

He said there was no time period on this and there were no final dealer numbers in mind.

“The key element is that we are moving to a business model where the Peugeot and Citroen dealers will be together,” he said.

“That will help in terms of profitability. I would like to get to – and this is more a medium to long-term issue rather than something in the short term – dealers in the city selling 75 units per month and those in the provincial areas selling 30 a month.

“Now that’s a way off in terms of timing but we are way off those numbers at the moment.”

Mr Senior termed the business model as a “three-legged stool”.

“There is PCA with Inchcape as the distributor, then PSA and then the dealer network.

Peugeot 3008 

“We all have to be heading in the right direction, committed, accountable and to ensure the network will be very profitable. That’s the priority.

“When you have 38 dealers selling less than 200 a month, there’s no surprise that they’re not profitable.

“So it’s one of those where unfortunately we have to rationalise a little bit to protect the long term benefits to the brand and also to our dealers.”

Already the heat has hit some franchisees.

“We have had three dealers that have told us they would be handing back the franchise either immediately or in the short term,” Mr Senior said.

The future dealerships will have distinct changes to those that operated under SDMG with the major differences including the change to dual-brand sales and the potential to operate from a single showroom.

There will be changes to the corporate identity of the new dealership network but Mr Senior said that wouldn’t be decided until after the network review was completed.

He said that at a distributor level, field staff who visit dealerships previously represented either Peugeot or Citroen. Mr Senior said “that changes now”.

“Field staff will be there for both brands when visiting dealers,” he said.

“There will be none of the Peugeot guy turning up in the morning and the Citroen guy in the afternoon at the same dealership.

Citroen C3

But the new PCA will have a freehand at developing new retail initiatives.

“PSA has encouraged us to look at innovations in retailing and we’ll certainly do that,” Mr Senior said.

“This includes pop-ups, permanent shopping centre areas, digital and so on. They’ll leave it to us but certainly they are encouraging us.

“There are examples of retailing concepts that we can use from Europe and the Middle East and we will certainly look at those.”

One thing that is off the table is any participation in motorsport. Inchcape has been highly successful in its current rally program with a Subaru backed by the distributor and specialist Tasmanian rally business Les Walkden.

“Motorsport is not in PCA’s foreseeable future,” Mr Senior said.

“We have our hands full with the network and getting the right products.

“We could piggy-back some aspects of motorsport for promotion material in Australia but it would certainly not be anything like setting up a racing team.”

The product change for PCA will affect both Peugeot and Citroen nameplates.

“Peugeot has strength in passenger vehicles but is developing a core focus in SUVs with the 2008 and 3008 and later this year, the 5008,” Mr Senior said.

“Citroen is going to be a younger, funkier and more vibrant brand but all the commercial vehicles will be marketed under the Citroen banner.

“There will be a huge ramp up in light-commercial vehicle focus because that to me is the untapped potential of the models.

“I see a big future in e-commerce and part of that is how does the product get to the customers. Well within a quick period of time, models like the Berlingo (small van) are ideal for those so you will see a lot more focus on LCVs.”

Despite Citroen being both “funky” and “LCV”, it will drop models from its current range including the Picasso five-seat MPV and C4 hatchback.

There will be a new Citroen C3 in October, together with a mid-life update for the equivalent-sized Peugeot 308 hatch.

Citroen’s luxury DS brand, pulled from the Australian market with no cars available and none on the horizon despite an active European market, will return but not yet.

“DS is a strategy of PSA for the future,” Mr Senior said.

“We have to walk before we can run. We have made a commitment with PSA to sit down and talk about DS but that meeting won’t take place until the middle of next year.”

By Neil Dowling