China is key to PSA becoming a global car maker: Carlos Tavares

The success of the PSA Group's brands, Peugeot, Citroen and DS, in China is fundamental to showing its capabilities globally, according to boss Carlos Tavares.

“China is the biggest market in the world. We want to become a global car maker, so it is important for us to be successful in China,” said Tavares.

He acknowledged that “so far this is not the case” and that the company “is not going in the right direction” in China. Sales dropped by around 16% in China and south-east Asia last year, due to a pricing war that led PSA to restructure its activities to reduce costs.

Tavares, speaking at the Citroen C5 Aircorss reveal in Shanghai, added: “Being successful in China shows we are capable of being a global car maker. That’s why it’s strategic for us to be here."

Tavares said with all its brands now offering fresh, competitive SUVs – Peugeot’s 3008 (called 4008 in China) and 5008, the C5 Aircross for Citroën and the DS 7 Crossback – it was now in a good position to fight back. “The good news is that many things can be improved,” he said. “Now the implementation needs to be done."

With Peugeot and Citroën evidently the biggest of the three brands in China for PSA, Tavares said DS’s main problem was a lack of awareness. He said a premium brand “needs roots, which takes time”, but he added that it is the only French premium automotive brand that is exporting its products, giving the brand a unique selling point.

When asked whether PSA was too Europe-centric to be a serious global contender, Tavares said he did not see any contradiction between the two.

“There is nothing wrong with being European; we make most of our money in Europe. And the more money we make, the greater our capability to invest overseas.”

PSA announced last year that it was re-entering the North American market – a key factor to becoming a global car maker – with a Peugeot mobility service, essentially a car sharing scheme.

“We want to understand the US consumer,” said Tavares, “and a mobility service is a much less risky business than selling cars in the country.”

Meanwhile, PSA’s purchase of General Motors’ European arm, Opel, will be complete by the end of this year.

Also read: PSA Group to start new India innings with CMP-based model, 10-15K units annually