French Automaker Thinks It's Figured Out American Car Buyers

May. 16, 2018 2:15 PM ET by Jay Traugott / 13 Comments

The French have figured out Americans? This'll be interesting.

We've been hearing rumors of Peugeot and Citroen's triumphant return to the US market for a decade or so, and it has yet to happen. The PSA group, which includes Peugeot, Citroen, and now Opel/Vauxhall, has reportedly been doing its homework on America and its highly competitive automotive industry. Questions have been asked. Such as, what do US customers want not only in vehicles but also in the shopping experience itself? And, how can it reduce dealership startup costs?

Automotive News reports that the PSA group believes it's found the answers. What are they? Relatively low cost software tools, such as mobile applications. "We see the high cost of doing this business; we see the challenges that exist in profitability for dealers and OEMs," PSA North America chief Larry Dominique explained. "We believe with the new tools, the new technology, the new customer expectations, there are leaner, more agile ways to do this." Setting up shop in the US is anything but cheap for both OEMs and dealers, and PSA realized it had to have a game plan beforehand – especially for future dealerships. You see, US car dealerships have been losing money recently.

According to data from the National Automobile Dealers Association, in 2017, dealerships were losing about $421 on every new car and $2 on every used car, after expenses. Only a couple years before, in 2015, dealers lost only $22 per new car and $132 per used car. Looking at these figures, why would anyone want to sign up for a franchise that has very little name recognition? "The world is changing around us from a standpoint of the way the people buy and engage in purchases," Dominique added. North America currently has more than 40 car brands and more than 300 models. Add to that headache is how the automotive industry, in general, is changing.

Electrification, autonomous tech and car sharing will become even more popular in the years ahead. PSA last sold cars in the US in 1991, so it also faces the challenge of introducing itself to a new generation who weren't even born yet at the time of its departure. Its new goal is to return to the US by 2026. Dominique also happens to be a former Nissan and TrueCar executive, meaning he clearly understands the car business and where it's heading, hence his software push. "I don't want to go to people and say, you have to build me a Taj Mahal with this color tile and this fabric on your chairs," Dominique said. "When you have a high-fixed-cost base like the way the retail environment is today, it's just challenging to change that cost structure."

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French Automaker Thinks It's Figured Out American Car Buyers

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