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Curtis Hutchinson: Breaking the rules

Peugeot’s product-led revival has been accompanied by a new way of doing things in its dealer network which is already resonating with user-choosers and SMEs.

Peugeot is breaking the rules, says Hutchinson

Company car drivers now have a solution to an age-old conundrum. And it’s so simple you wonder why it has never been done before.

Traditionally when a user-chooser’s car comes to the end of its tenure they visit a dealer, pretend to be a retail customer, kick a few tyres and go for a test drive. The showroom salesperson, sensing a hot prospect, will duly roll out the red carpet and pour the lattes.

It’s a typical scenario borne out of mutual distrust. The company car driver knows they will not be taken seriously unless they pose as a punter, while the salesperson is unlikely to invest the time and effort into a sale that won’t happen and for which they won’t be rewarded.

However, Peugeot has quietly broken the rules. When it launched the new 508 at the beginning of the year it knew it had a car with potential user-chooser and SME appeal so it encouraged company car drivers to visit dealers and take a 24-hour test drive.

For the programme to work, sales staff were incentivised to engage with them as if they were retail customers. Peugeot also put mechanisms in place whereby if that driver goes on to choose a 508, even if it’s sourced through a leasing company, then it goes towards the dealership’s sales target.

The pilot worked so well that Peugeot is considering rolling it out for subsequent new model launches.

It’s easy to see how the scheme came about. David Peel, the managing director of Peugeot, is a rare breed. He is a car boss who has run a major dealer group; the factory-owned PSA Peugeot Citroën Retail network.

This insight enables Peugeot to look at things slightly differently to other mainstream brands and that’s proving to be welcome news for SMEs, company car user-choosers and fleet managers.

“This is significantly different to anything we have done before and addresses an industry-wide issue,” says Peel.

“We all know the horrendous experience user-choosers get when they are genuinely choosing their next car and we now have a standard approach for any user-chooser or SME going into a network site and having a good experience,” he adds.

“We’ve tried to think from a dealer’s perspective and provide what they want so they are not disadvantaged by talking to someone who might source their car elsewhere.”

Peel’s been in the top job exactly three years and is leading a brand in transition, admitting there’s more to be done. Volumes are down but can be explained by a more rational approach to daily rental. Gone are the days of over-trading in fast-churn business, with Peel imposing a strict cap so that only 10% of Peugeot’s total volumes will go into daily rental.

Instead of chasing registrations, the brand targets a more sustainable 5% share of the fleet, SME and retail markets. It’s certainly found itself back on more choice lists with 52% of total sales currently going into fleet, helped by a winning combination of desirable new products with strong residual values.

Driven by a desire to improve RVs, while drawing upon his understanding of the retail sector, Peel has also sanctioned a fundamental change to the demonstrator model applied by all car brands.

When a new car is launched, dealers typically source the highest specification models in the latest swanky colour in the hope of guaranteeing a quick sale at the end. In the Peugeot network this usually led to 200 virtually identical cars hitting the used market at the same time, six months down the road, resulting in a RV slapping.

Starting with the 3008, Peugeot removed this choice. It contract-hired demonstrators to its dealers and worked with the likes of Cap to determine the best mix of derivatives and colours to return the highest possible RVs.

The move worked, contributing to a 51% uplift on 3008 RVs with the programme subsequently employed for the 5008, 508 and commercials too.

Stronger RVs will certainly help the brand focus on building its SME business, which it aims to grow by 18% this year. Peugeot operates business centres in 52 of its 180 UK dealers which are geared up to prospect for new SME business. However, the full network is now expected to serve the sales and servicing needs of small businesses and these initiatives will certainly resonate with them.

“We class SME internally as our ‘green channel’; it’s good sustainable business,” finishes Peel.

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Curtis Hutchinson

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