Renault-PSA: one is intercontinental, the other is not.

The commercial results of the two French carmakers were published last week and, behind the facade homology represented by the similarity of volumes (3.75 million for Renault and 3.48 million for PSA) and their decline (-3.4% for Renault and -10% for PSA), the figures underline the significant differences between the two manufacturers.

 

Thus, seen from France, one would get the impression that PSA is outperforming Renault. In most segments except B, Renault products are barely outperforming Peugeot products and the latter obviously give PSA a "pricing power" that Renault is struggling to conquer. The financial results corresponding to the commercial results published last week are likely to confirm this in February.
The symbol of this opposition is within the "C-segment" of SUVs (or the other way round) where Kadjar sales in France have been below 40,000 units in 2019, while Peugeot has sold more than 70,000 units of 3008s and Citroën almost 35,000 C5 Aircross. These differences can be seen worldwide. Renault sold 125,300 Kadjar and PSA 242,332 Peugeot 3008 and 122,123 C5 Aircross in 2019.

 

However, the Renault group is ultimately doing rather better than PSA and would only lose 29,000 sales if it had not had to give up its 101,347 sales in Iran. PSA sees its sales fall by almost 390,000, of which only 144,000 are linked to Iran Khodro. If this is the case, it is because PSA makes 87% of its sales of its four brands in Europe whereas Renault depends on Europe for less than 52% of its volumes.

 

PSA and its four brands have a very European positioning and very similar product policies. Renault manages a portfolio of brands and models that are much more heterogeneous and capable of providing the company with products for international markets that PSA does not have. Thus, even in China, in 2019, Renault is doing better than PSA since PSA loses 145,000 sales (!) and finds itself with 117,000 registrations (!) whereas Renault loses only 37,000 and claims 179,500 vehicles sold. This does not correspond, it is true, to the success of Renault products (22,000 sales) but to the sales of Jinbei light commercial vehicles, but it is emblematic of the difference between the two groups: the Renault group is not reduced to the Renault brand and the group's other brands are very different from the flagship brand.

 

Samsung, Lada, Dacia or Jinbei offer products that bear little resemblance to Clio or Megane and Renault's top management does not need to appoint project managers every 5 years and/or pay marketing consultants to position the brands in relation to each other. Similarly, when it comes to taking the Renault brand outside Europe, the manufacturer has learned to be flexible and adaptable and can put different products in its catalogue: the famous "brand universe" has no reason to be the same depending on whether it is in Brazil, India or France.

 

The case of Latin America is exemplary in this respect. Renault's sales in Latin America fell by 12,500 units due to the collapse of sales in Argentina (-50,000), which could not be fully offset by growth in sales in Brazil, Colombia and Mexico. They fell from 437,000 to 424,500. For PSA, the decline in sales was 40,000 and sales in 2019 were 135,700 vehicles. The contrast is striking and reflects the fact that the group can only offer Brazilian or Argentine consumers Peugeot or Citroën vehicles designed in Europe for Europeans, whereas Renault has been marketing for the past two years its Kwid, which from its Indian origin has been largely "Brasilianized" and is now in fourth place in the Brazilian sales charts behind the Chevrolet Onix, Ford Ka and Hyundai HB20. Renault has thus snatched fourth place from Ford on the Brazilian market with 9% market share. PSA is at 1.8% with two brands that each have to manage networks and maintain product portfolios that have all the less reason to be seriously reworked to stick to the local market as the volumes each one provides are low.

 

From this point of view, apart from Schweitzer's brilliant Logan initiative and the takeover of Dacia and AvtoVaz, Renault undoubtedly benefited from the "Yalta" decided by Carlos Ghosn, which permanently deprived Renault of the opportunity to try the Chinese adventure, restricted to Nissan. In fact, the Chinese market was for a long time a fairly easy market where manufacturers mainly offered products from their catalogues, "sinised" them a minima and very often managed to sell them well, and at a relatively high price whilst manufacturing them for cheap. Because Renault did not have access to the largest and easiest of the emerging markets, it was in the other three BRICs that the teams had to take an interest. These had much more stringent industrial and commercial requirements, and both the engineering teams and Renault dealers had to learn how to comply with them.

 

In the future PSA-FCA entity, Fiat and Alfa Romeo, which are also mainly European brands, and Dodge, RAM, Chrysler and Jeep, will be added to the four PSA brands. The last three are very American and Chrysler has not been able in the past to successfully leave the United States and therefore seems to suffer from the same deficiencies as PSA. On the other hand, Jeep has shown for several years that its teams know how to make the brand travel and Fiat has been able to do this work in Brazil in particular in the past. Fiat and Jeep could thus bring to PSA a little bit of this culture that it lacks. The only thing left to do is to invest in products that are a little less American or European to be able to emerge from the marginality that makes PSA one of the first victims of the turnarounds in the emerging countries: we can see it in China at the moment, it is the smallest who suffer the most. Thanks to Fiat and Jeep, PSA-FCA will have at least, outside China, strong positions in one emerging market. It's better than nothing, but it's still very slim.

 

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