Peugeot Citroen targets China's luxury buyers

BEIJING Thu Jun 28, 2012 11:59am EDT

People view a Citroen DS5 ahead of the launch ceremony for mainland China market in Beijing, June 28, 2012. REUTERS/Soo Hoo Zheyang

People view a Citroen DS5 ahead of the launch ceremony for mainland China market in Beijing, June 28, 2012.

Credit: Reuters/Soo Hoo Zheyang

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BEIJING (Reuters) - PSA Peugeot Citroen (PEUP.PA) is targeting China's luxury buyers as it strives to win a bigger share of the world's largest auto market and expects sales there to reach 15 percent of its global total by 2015, its Asia head said on Thursday.

The struggling French car maker, which last year had 11 percent of its sales in China, aims to almost double its sales of lower-range cars there by 2015 as it comes from behind market leaders General Motors (GM.N) and Volkswagen (VOWG_p.DE).

Volkswagen's Audi, BMW (BMWG.DE) and Daimler AG's (DAIGn.DE) Mercedes-Benz dominate the premier car market in a country that is ever more important for global auto makers as economic weakness depresses sales in the West.

Europe's second biggest automaker has made its upscale Citroen DS3, DS4 and DS5 - long, low-slung cars - available in China for the first time.

"The premier market is now 8 percent of the Chinese market, which means one million people are buying luxury cars this year," Gregoire Olivier told Reuters in an interview.

"In 2020 we believe it will be more than 15 percent for a car market which would have doubled... The DS is addressing this new generation of premier car buyers and we think there is a lot of room even for others."

Peugeot expects those models to compete with Volvo, in a price bracket below the German brands, rather than with the likes of Volkswagen's Passat or the Buick Lacrosse from General Motors, at the top end of the regular car market.

The DS5 is priced at 300,000-350,000 yuan ($47,000-55,000) with the DS4 at up to 300,000 yuan, on a par with Volvo cars of similar size. Peugeot has begun opening dedicated outlets for the DS in China, designed to be more stylish than its others, and aims to have over 100 of them by 2015.

BUILDING CAPACITY

In addition to 200,000 DS cars, Peugeot aims to expand sales of other models to 750,000 by 2015 compared to the 404,000 that it sold in China last year. It is introducing four new Peugeot cars and four additional Citroen models apart from the DS range.

The picture is a sharp contrast from Europe. Peugeot said on Thursday it was looking for additional cost savings and freeing capacity at one of its two Paris plants to prepare for the other's closure.

Olivier expected the Chinese expansion to keep on track despite a slowdown in car market growth after the withdrawal of government incentives for buyers in 2010.

He expected China's overall car market would continue to grow at 8-10 percent in the coming years due to low penetration in smaller cities and rural areas.

Last year, Peugeot started work on its third China plant, jointly run with Dongfeng Motor Group Co (0489.HK), which will give the partners a total capacity of 750,000 vehicles by 2015.

Peugeot is also building a factory able to produce 200,000 cars a year with China Changan Automobile Group for its DS line up.

GM - which has an alliance with Peugeot - Nissan Motor (7201.T) and Honda Motor (7267.T), are also playing catch-up to the Germans in China's premier market.

Nissan will make Infiniti cars in China from 2014 and GM expects Cadillac sales to match U.S. levels by 2015 or 2016.

GM sold over 2.5 million vehicles in China last year. Half of them were cheap minivans.

($1 = 6.3554 Chinese yuan)

(Editing by Matthew Tostevin)

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