PSA plots lower-cost course for U.S. return


PSA’s Larry Dominique: “We see the challenges that exist in profitability for dealers and OEMs.”

DETROIT — As PSA Group plots its decade-long comeback into the U.S., the French automaker is considering a tech-centric, digital shopper-focused approach to moving sheet metal, which would reduce overhead and startup costs for dealers.

PSA’s hybrid route into a highly competitive auto market could involve a blend of software tools, mobile applications and a low-investment, high-margin retail network. PSA, which owns the Peugeot, Citroen, DS, Opel and Vauxhall brands, intends to begin selling vehicles in the United States by 2026.

“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 told Automotive News Europe sister publication Automotive News in a meeting this month. “We believe with the new tools, the new technology, the new customer expectations, there are leaner, more agile ways to do this.”

Dominique stressed that no decisions have been made. But should PSA go with a dealer network, one aim would be to help dealers be profitable in an increasingly unprofitable business.

“The world is changing around us from a standpoint of the way the people buy and engage in purchases,” said Dominique, 55, a former Nissan executive.

Dealership expenses as a percentage of total sales inched higher to 98.7 percent last year from 92.8 percent in 2015, according to National Automobile Dealers Association data. Losses on new vehicles ballooned to $ 421 per car last year from $ 22 per car in 2015. Even worse, dealers lost $ 2 per used car in 2017, from a $ 132 profit three years ago, marking the first time in years that dealerships have lost money on used-car sales.

“We need to find a way to reduce our fixed costs,” Dominique said. “We want people to make a profit selling a new car.”

Tentative steps

PSA is entering a highly competitive North American market — one with more than 40 automotive brands and more than 300 models. And, the industry is in the midst of transformation by electrification, autonomous technologies and new ownership models.

PSA has taken tentative steps back into the U.S. after bailing out in 1991. The automaker last year launched Free2Move, an aggregation platform that enables users to book and pay for a variety of transportation services, such as ride-hailing or public transit, with one mobile app. Eventually, PSA will launch its own U.S. sales channel.

Dominique did not offer details on which PSA brands would be introduced to the country first, nor did he want to be pinned down on a U.S. launch time frame.

“At the end of this year, we are going to make things a lot clearer relative to [product launch] timelines,” Dominique said. “By early ’19, we are going to be working more toward the next phase of selling retail, not just planning.”

No ‘Taj Mahals’

With its North American rollout, PSA wants to invest resources in “brand-building.” The retail strategy might involve using technology to offload some consumer-facing services such as scheduling vehicle delivery and pickup, so dealers can focus on the profitable service and F&I businesses.

“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.”

But, that doesn’t mean the brick-and-mortar dealership is going away. There are lots of “physical touch points” associated with buying a car, such as test drives, vehicle delivery and service.

“One of the things we are studying right now is, how can we best balance this — make a better customer experience, more seamless, more online, but also provide the right access to the services and the physical elements when you need them?” Dominique said.

The automaker is looking beyond the auto industry for input, reaching out to tech startups, e-commerce and logistics companies.

“We are being very careful in how we are planning this because I only have one chance to build this the right way and scale it,” Dominique said. “We want to learn and iterate.”

You can reach Urvaksh Karkaria at


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