|
Peugeot’s once enviable financial strength is on the wane. Its profits are sliding. Shareholders have been warned that the decline will continue. Peugeot chairman Jean-Martin Folz is preparing a rescue plan to be unveiled in September. Peugeot desperately needs its new little 207, now on sale across Europe, to be more popular than Martin Luther King and Nelson Mandela combined.
The first signs aren’t good.
Peugeot’s 207 faces a much tougher market than its predecessor, the 206. When the 206 (it remains in production as a cheap and cheerful entry model in the sector) was launched back in 1998, there were 44 direct competitors in the market place, according to Peugeot. The company sold more than 5.4 million 206s, but for the 207 there are 70 direct competitors, not least some formidable vehicles from Korea which now compete on looks, price and quality. I’m not sure how Peugeot came up with those numbers, but it is unarguable that the competitive temperature is much higher today than back in the ‘90s.
If Peugeot’s tricky position in the market place with its products wasn’t obvious, its latest financial results make it clear. Peugeot announced that in the first half of 2006 operating profits fell nearly 50%, and it warned shareholders for the third time in 12 months that it was cutting its profit target for all of 2006. This means that worryingly, despite the impact of sales of its most important product – the 207 - profits will not be up to scratch. It begs the question, if Peugeot can’t make easy money when its products are fresh, what will happen when they start to look a bit dated?
For a car to succeed in this crowded Supermini sector, it must stand out from the huge crowd because of its price, its looks, or its irresistible proposition. In my opinion the only car still to demand attention in this category is the Honda Jazz, (declaration of interest, my wife Kathy has one) although the Nissan Note, and Suzuki Swift I’ve just been driving are formidable new competitors. If a car doesn’t command attention in one of these categories, it becomes simply a commodity, doomed to sell to the lowest bidder.
I fear that the 207 falls into commodity mode. It doesn’t look much different from the old one for a start, although Peugeot tries to tell us that it has a strong and expressive character. It is bigger, roomier, with a better trim than the 206, and more refined. Ominously, a quick check with the new competitor the Opel/Vauxhall Corsa at the London car show in July, showed that the Corsa, designed in conjunction with Fiat’s highly successful Grande Punto, has much more room inside than the 207.
“The new 207 is the grown up small family car for the family (sic) looking for a safe stylish, fun car with its own character,” says Peugeot.
As for price, it is hard to make firm comparisons because of the mix of standard and extra options, but it is safe to say the 207 won’t sell on price. The bare bones 1.4 litre 3-door base model sells for a whopping £8,995 (€13,149).
Exceptionally cute competitor
I’ve just been driving a Suzuki Swift GLX 5-door with a 1.5 litre petrol engine, which includes air conditioning, remote and keyless central locking, front electric windows, tinted glass, alloys, body-coloured door mirrors and handles, electromagnetic tailgate opener (whatever that is) fog lamps, driver, and front passenger airbags, side and curtain, ABS, EBD, remote fuel lid opener, and more, all for £8,999 (€13,150). And the Swift looks exceptionally cute, drives well, and is very flexible although not up to Jazz standards, and feels as tough as nails.
The 207 range offers three petrol engines – 1.4 litre/75bhp, 1.4/90 bhp, 1.6/90 bhp – and three diesels 1.4/70, 1.6/90 and 1.6/110. The 207 1.6 110 HDI diesel that I drove was exceptional on the road. The steering was fast and accurate, and the suspension provided a very stable and absorbent ride. The diesel engine was terrific, but the 5-speed manual gear-box felt a bit stodgy. Only 5-speeds too for a top of the range vehicle, when I thought 6 was now de rigueur, although personally, I’d rather have just 5 gears, especially when the diesel engine is so powerful and torquey.
Safety is superlative, as usual with Peugeot. The 207 gets the maximum 5 stars for adult occupation protection from EuroEncap, and 3 stars for pedestrian protection.
25% undershoot
Fuel consumption was impressive, but not as impressive as Peugeot’s claims. I averaged 44.1 mpg (6.4 l/kms) without really trying to be economic; Peugeot claims the car will do an average 58.8 (4.8 l/kms), that’s 25 per cent more than reality. Outrageously, an exaggeration of one quarter compares favourably with most car makers’ claims.
The dashboard was well designed, and the driver’s seat very comfortable with plenty of adjustment to find the perfect position.
Inside the car, there’s plenty of room for the front passengers, but it’s a bit limited in the back, with not much legroom or headroom. The biggest disappointment was the lack of flexibility when loading up stuff. Peugeot should have spent more time designing this aspect of the car, rather than over-designing the exterior to look superficially different from the old one, and failing.
Firstly, when you flatten the rear seats for loading, the parcel shelf at the back should at least sit flat on the floor. It didn’t. There was no way to properly flatten the rear area either. The top of the range version that I drove - £14,750/€21,500 no less - had a gimmicky device which flattened the wing mirrors whenever you locked the car doors. Maybe if I lived a bit closer to the under class, or in Central London, it would have seemed useful. To be fair, this car also had a leather interior, satellite navigation, CD auto-changer with telephone, huge glass sun roof, and a fancy hi-fi system.
Political backlash won’t help
I think the 207 will struggle in the market place. It doesn’t look that great, prices are not that competitive. The proposition doesn’t sing. Another factor won’t help either. Peugeot’s British factory in Coventry, the Midlands, which makes the 206, is closing down by mid-2007. One of the reasons that Rover managed to sell any of its poorly designed and over-priced vehicles was an understandable desire by Britons to buy something made by their fellow citizens if possible. Peugeot will no longer be able to claim that it has a British connection, and if the Peugeot unions make enough noise, as they seem to be doing, most people visiting Peugeot dealerships will be made aware of this. It is another reason not to buy a Peugeot.
Peugeot closed down its British manufacturing on the grounds of quite understandable economics, but they probably didn’t reckon on a political backlash undermining their prospects in the marketplace. That could prove a costly decision in Peugeot’s biggest export market.
|
