Talking to the industry – fleet, leasing, price guides and analysts – and letting them in on secretive plans, then listening to their opinions, is an approach more and more carmakers are adopting in order to get the highest price possible when the cars leave a fleet.
Peugeot is using these experts to set the specification levels of every new car it builds in future. It needs to know what equipment used buyers will want, and what might sound tempting but in fact will prove a costly addition.
The French firm is hoping additional expertise relating to the spread of standard equipment will raise the profile of the brand with business users across major EU markets – and therefore play a significant role in boosting residual values.
The change in marketing strategy comes as finishing touches are being put on the Peugeot 207, the next-generation three and five-door supermini line-up that is set to become Peugeot’s most popular global model range when it goes on sale in May.
International fleet division used vehicle sales chief Roger Schmitt told Fleet NewsNet: ‘We have proved in the past that we have considerable expertise in design, but now we want to show what we have created to the people who are experts in other areas. We would like their views on our specification and trim levels – the areas that are so important to how a car is perceived and to its subsequent value in the used car market.
‘Like other manufacturers, we receive a lot of information from the prospective customers we talk to at clinic sessions. Our next step is to build on this data by asking the fleet industry experts to tell us how they view our products on a two, three or four-year basis.’
In an exclusive interview at the PSA Peugeot Citroen group headquarters in Paris, he said the new strategy had been developed following a trial session in Germany with the 407 range.
‘Eight months before the car was launched, we asked a group of influential fleet industry people to give us their thoughts relating in particular to how the 407 compared with Mercedes-Benz and Volkswagen models on the quality of materials. The feedback we received was invaluable.
‘There is no doubt that this kind of information is important to our efforts to raise the general perception of our vehicles. And having this information well in advance of the market launch is much more useful than receiving it just a month before the vehicle goes on sale.
‘As far as the 207 is concerned, we have had meetings with experts from France, Germany, Spain, the UK and Italy, the countries that make up the biggest markets in Europe. The aim was to give the best possible start to a car that will have a production level of at least the volume of the 206, which was the best-selling car in Europe for five years.
‘What we are doing also reflects the way competition has increased in the B-segment. When we launched the Peugeot 205 in the early 1980s, it had 10 competitors. When we rolled out the 206 in 1997, the number of rivals had grown to 25 – but when the 207 comes to market, it will be one of a total of 40 cars in the sector.’
Set up in 2001, Schmitt’s unit is dedicated to developing Peugeot’s portion of a European market that saw close on 29 million used vehicles change hands last year – two and a half times more transactions than in the new car market.
He said: ‘It is significant that while new car sales remain fairly static, used vehicle sales are reflecting significant growth and we want the used car to be a profitable business across our network. The problem is that the market is being shared with more and more new entrants, such as those from Korea, so it is very important that our organisation becomes more professional.
‘We believe that today’s customer for a used car is tomorrow’s new car buyer, so we hope to make a bigger impact by helping the used car generate brand loyalty. It has to be a good product, backed by good service and the appropriate package of benefits.’
The approach is seen as particularly relevant in eastern Europe, where only 10% of the population is thought to be able to afford a new car. This year, the unit has processed 20,000 sales from major left- hand drive markets to countries like Poland and Bulgaria.
Schmitt said: ‘Our cross-border business is growing and is probably the most sophisticated in the industry. The longer it remains unsold, the more a used vehicle loses in value, so we have adopted a system of rotation to avoid excessive ageing of stock in any country.
‘Instead of leaving a car unsold in France for four months, I’d prefer it to be sold immediately in Czechoslovakia. I concede the price it achieves might be up to E500 lower, but the transaction helps protect residual values back in France while also allowing our network to do business and become more professional. And of course, it also increases the number of Peugeot cars in a developing market.
‘I think the way we carry out our cross-border business is unique.
‘Each of our country networks can buy what it wants, where it wants. For example, if there are too many used 407s in one country’s network, some can be transferred to improve the offer in another country’s network, so there is a constant flow of vehicles within the major European markets.
‘Right-hand drive prevents much of what we do from applying to the UK market, but we have still been able to help a shortage of used cars there this year by supplying 500 cars from our tax-free division that have been leased by visitors. Next year the number will rise to 2,500.
‘At the root of what we do is maintaining a consistent supply. Being short of vehicles is just as bad as having too many. The system is working – when we started, the 206 was perceived in Germany as being equal to Fiat, but now it is the leading residuals in the B-segment. The 307 is also greatly improved in this respect.
‘With 40% of new vehicle sales involving a part exchange, it is clear that used cars have considerable sales leverage power on replacement markets,’ said Schmitt.