AUTOSHOW-French car makers plan big Germany drive

Wed Sep 12, 2007 5:58am EDT

By Marcel Michelson

FRANKFURT, Sept 12 (Reuters) - French carmakers are staging a fresh assault on the German market, the biggest and most profitable in Europe, whose well-off but cost-conscious and demanding buyers set European standards for car handling, comfort and performance.

Renault (RENA.PA) and PSA Peugeot Citroen (PEUP.PA) are both trying to cut their dependence on Europe, with Renault's strategy head Patrick Pelata saying that more than 40 percent of total group car sales will be made outside the region by 2009.

But that does not mean they are focusing all their attention on emerging markets such as Brazil, Russia, India and China, and both makers intend to seek a fight with the German car makers on their home turf.

At Renault, the new Laguna model marks the diamond-badged carmaker's new foray into the luxury market of cars that sell for more than 27,000 euros ($37,000). The segment has attractive profit margins for the still weak-performing company that has a 44 percent stake in alliance partner Nissan 7210.T.

The Laguna is designed expressly to please the German consumer.

"Our German marketing man was present at all main meetings that I presided for this car," Renault Chief Executive Carlos Ghosn said. "He told us what he believed the German buyer would expect and like."

"The Laguna is very important here in Germany. There will be no improvement in the image of Renault if we don't succeed in Germany," Renault Patrick Pelata told a briefing at the Frankfurt International Motor Show.

"We do not have big ambitions in volumes but a very big ambition in terms of quality," he said. "If we succeed with Laguna, we will also succeed with the new Megane and the new Espace," he added, referring to Renault's biggest-selling main model and its large people carrier.

CITROEN C6

For Christian Streiff, chief executive of PSA Peugeot Citroen, the challenge is similarly clear: "If we succeed in Germany we can succeed in Europe."

At PSA, Citroen managing director Gilles Michel is in charge of the "Germany Plan" for the group as well as heading a drive to improve after-sales services for the car maker as a whole.

"We have to rebuild a presence in Germany, we have to show that we are there, create credibility," he said in an interview.

PSA has long been associated with small and medium-sized cars and people carriers. Its luxury offerings sold well in France but to a lesser extend beyond the home market.

The C6 limousine, launched last year as a spiritual heir to the long and sleek Citroen DS that was the official car of President Charles de Gaulle, is the group's latest attempt to fashion a crowbar to prise open the German luxury segment dominated by Mercedes (DAIGn.DE), Audi (NSUG.DE) (VOWG.DE) and BMW (BMWG.DE).

But so far it has been a mixed success.

"C6 has allowed us to show that we are back in Germany. The buyers like it ... but the sale volumes are perhaps below those that had originally been expected," Michel said.

The Peugeot brand had a market share of 3.2 percent in Germany in 2006 and Citroen 2.4 percent. Streiff has set a 2010 goal of 10 percent.

"It has to go up, that is clear, but there are no fixed targets," Michel said, however.

"We will roll out new models that respond to the expectations of German users, but we will not try to make a German car; Citroen will remain a French car brand," Michel said

He said the C4 Grand Picasso multi-purpose vehicle and the C-Crosser sports utility vehicle could sell well in Germany, as well as the replacement for the C5 saloon. But he declined to give a date for the launch of that car.

((Additional reporting by Benoit Van Overstraeten,

Editing by Quentin Bryar

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