PSA execs say net pricing gaps with VW, Ford, others closing faster than expected

Peugeot was almost on par with the Volkswagen brand in terms of net pricing in Europe in the first half, company figures show. By the end of June, Citroen brand had already reached its full-year net pricing target on its new benchmark: Ford. Even the slow-selling DS near-premium brand is narrowing its gap on Audi faster than planned.

PSA's new Europe boss, Maxime Picat, who led the Peugeot brand until his recent promotion, said that numerous internal comparison tests have shown that Peugeot is already beating VW in the key compact SUV segment. "Our new 3008 is better [in net pricing] than the new Tiguan and better than the BMW X1 as well," he told Automotive News Europe sister publication Automobilwoche.

PSA is also showing more confidence in its price setting. The most expensive variant of the 3008, the GT diesel, starts at 39,700 euros in Germany. The price range for VW's top trim level for the Tiguan is 33,975 to 42,700 euros in Germany.

Picat said one key reason the gap narrowed is because the brands Peugeot and DS benchmark for pricing, VW and Audi, had been using incentives to maintain volumes at the height of VW Group’s emissions-cheating scandal. In spring, however, the brands stabilized their incentive spending, Picat said.

 PSA does not officially confirm the benchmarks for each of its brands, it also doesn't deny the names of the brands previously mentioned in this story. Automotive News Europe has also learned that PSA changed its benchmark for Citroen to Ford from Renault. The reason for the change was high volatility in Renault's net pricing in Europe, sources told ANE.

Pricing discipline in Europe has helped to make PSA one of the best-performing automakers in world. PSA CEO Carlos Tavares told Automotive News Europe that the automaker ranked fourth globally in terms of operating margin in the first half. PSA reported a 6.8 percent margin for its automotive operations in the January-June period, compared with a 4 percent target set for the full year and 5 percent achieved in 2015. "We continue to be disciplined in pricing, because performance matters more than size," Tavares said on the sidelines of the Paris auto show in September.

PSA's European sales grew by 7.4 percent to 1,056,000 units in the first half. Overall, PSA's first-half sales were flat at 1.54 million units largely because of a near 20 percent decline in its volume in China and Southeast Asia.