PSA-Renault: comparison is not right

The never-ending game
Last week aws marked byt the publication of PSA's excellent financial results.
Naturally, the comments to which this gave rise amply underscored the striking contrast between the two French carmakers in this regard and could give the impression that one was adrift where the other would have found the keys to excellence. Of course, the fact that Carlos Tavares comes from Renault and that he has attracted a significant number of highly competent and recognised managers to PSA can only reinforce this conviction. The French sales figures of the first two months of 2020 communicated by the CCFA on Sunday morning seem to go in this direction insofar as Renault and Dacia suffer and see their sales of passenger cars falling by 3.1% and 26.9% whereas Peugeot and DS grow and compensate for the fall of 6.2% of the sales of Citroën.
Renault's Clio 5 is outdistanced by Peugeot's 208 over the first two months. Renault's Captur 2 is being overtaken by the new 2008: the problem that was looming in Renault's C segment seems to be moving up to B and Dacia is no longer making up for it.
It would be wrong, however, to confine ourselves to an analysis that is too focused on France, Europe and 2019 and to interpret these serious commercial problems as the manifestation of serious shortcomings that are a sign of the disinheritance of Renault and the Alliance. In terms of fundamentals, Renault's achievements remain extremely solid and have been largely renewed and maintained. The platforms have been renewed. Industrial investments have been made. Strategic bets on international markets and on electric vehicles are managed with great consistency and, on these issues at least, Renault is ahead of PSA, for which the heavy investments and the corresponding long apprenticeships remain to be made.
Since 2014, PSA has benefited from a robust European market and was able to build a product plan symbolised by its 3008, which gave wings to the Peugeot brand and then spilled over to the other three brands. As the platforms and engines were efficient, each brand was able to build up a convincing range at relatively low cost and, as the pollution control choices made before the arrival of Carlos Tavares to treat NOx had been the right ones, the additional costs associated with the switch to WLTP were better controlled. With "pricing power" on the one hand, powerful commonalisation and streamlined ranges on the other, the recipe for European success on a largely SUV-ed ICE range has all the ingredients and the benefits are there.
In Europe, Renault maintained its very strong presence and recognition in the B segment during the same years with Clio 4 and Captur. The platform on which the Clio 5 and Captur 2 are built is new and high-performance, and has required very heavy investments. The unpredictable A segment continues to be dominated by Twingo and benefits from a platform that is designed to accommodate an electric propulsion system that will now be offered. The Dacia range continued to grow in all major European markets.
The only real problem is on the C and D segments where Renault has adopted a "and if there's only one left, I'll be that one" attitude on the MPVs and has had two major failures with Espace and Scenic. The Kadjar is a justly honourable success but has to make do with 111,000 sales in Europe where 3008 will exceed 210,000 in 2019.
Outside Europe, Renault did not rest on the laurels that corresponded to the breakthrough in emerging markets (Brazil and Russia in particular) that Logan, Sandero and Duster have helped to establish. In addition to renewing and supplementing these Renault ranges (with the Kaptur on the same basis and the Russian Arkana), Renault undertook to halve manufacturing costs once again by designing a platform, engine and gearbox in India. This led to the Kwid and, with Triber and then a future SUV, Renault is re-releasing the Logan epic by building on these bases a line of products capable of travelling to different markets in which European vehicles have no chance. Kwid is in the top 5 in Brazil. Triber was launched in February in South Africa.
PSA knows all this and intends to get down to work in India, but once again investments and learning are not behind the teams but in front and the associated difficulties and uncertainties are much greater than those faced when you have to rationalise your ranges, purchasing and industrial tools in Europe alone.
Concerning new engines and, in particular, EVs. The picture is fairly similar: Zoé's success and progress this year and the experience of the Renault teams he reveals is undeniably an asset. The launch this year of the electric Twingo and then a K-ZE equivalent also reflects the heavy investment required to provide the assets needed to transform the European market.
The fact that a specific platform, similar to the one on which VW designed its ID3, was developed with Nissan and that it is intended to support the development of electric models that will replace the very frustrating Talisman, Espace and Scenic in the Douai plant is a kind of symbol: Renault's teams have worked well within the framework of a very sustainable strategy. The problems that Volkswagen is currently experiencing in making its ID3 more reliable and getting it out on time are significant in this respect: even if a lot of money is invested, the accumulated backlog cannot be made up in a few months.
Against PSA, the big air pocket in Renault's sales in Europe masks an asymmetry that could well be the opposite. Renault has invested very heavily to build the assets needed to face the next decade and is struggling to match its sales to this real effort. When Clio 4 was launched with the success that we know it has had, the project had to be managed "PSA-style", i.e. in line with the economy by taking over most of the elements of Clio 3. Clio 5 is a completely different car and its performance is affected but its sales are not.
There is a discrepancy between the work done and its recognition by the market. Zoé's trajectory and its positioning in the first two months of 2020 in the Top 6 tells a very different story. It's not impossible that the rest of the year will enable this gap to be closed, but the most likely scenario is that Renault will have to take a big step back for a while before the crossover with PSA reverses itself again.
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Translated with, corrections by Géry Deffontaines

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