Banking on automotive sector shifts, PSA is re-entering the North American market as a mobility provider.
PSA’s biggest brand, Peugeot, bid adieu to the United States decades ago, following years of weak sales. More recently, there were rumblings that the French car maker was planning a return. Last month, PSA finally announced that it will re-enter North America – with a mobility services app, which it says is the future of the car market and of its company.
The app, called Free2Move, was launched in Washington D.C. in October. It offers ride-sharing, as well as car, scooter and bike rentals. PSA’s aim is to become a total mobility provider, said Carlos Tavares, who was appointed CEO of PSA in 2014 and is credited with its revitalisation. “We believe that human beings are eager to protect their spontaneous freedom of movement,” he said. “You need to have an available mobility tool that is going to fulfil this need for freedom to move anywhere, anytime, when you decide to do so.”
The Free2Move app launched in Europe last year, and it is central to PSA’s international business. This strategy depends on dramatic shifts in the future direction of the automotive sector “as electrification, autonomy and car-sharing remake a capital-intensive industry known for being set in its ways,” the New York Times notes.
The cars that Free2Move will maintain are not even PSA models. As Motor Trend editor Mark Rechtin explained, using “other manufacturers’ cars is a low-cost market research tool to buy time and determine what vehicles and features will work best here.” The decision indicates the caution PSA is exercising in the U.S. automotive market. It is a slow, strategic return. “Because we don’t want to rush,” Tavares said. “We want to start by making sure that our teams understand the U.S. consumer.”
A return to the North American market in any form is a bold move, considering its diversity, geographic expanse, regulations and competitive environment. The sheer cost of competing has kept new brands away, and established brands have withered. Tavares believes the best way to understand the expectations of U.S. consumers and the country’s automotive market, and thereby pave the way back, is through mobility services.
“The biggest mistake most companies make is overinvestment, and then the moment there’s an initial downturn, their fixed costs are way beyond their revenue and they’re in deep, deep trouble,” said Larry Dominique, CEO of PSA North America, who is leading the operation. “We want to avoid that. And how do you avoid that? By planning well and making sure you understand very, very well the trends, the consumers, the behaviors, their wants and desires.”
