Peugeot plans US return 30 years after exit

Some 30 years after exiting the United States due to plunging sales, Peugeot is preparing a return to a market where it previously knew glory at the famed Indianapolis 500. PSA Group Chief Executive Carlos Tavares said this week that the Peugeot -- a brand known for its lion logo -- is the parent company’s pick for the US market. The company plans to sell Peugeot autos in the US by 2026 in line with a multi-step 10-year plan first announced in 2016.

The comeback is being devised as PSA, which also sells cars under the Citroen and Opel brands, faces pressure from investors to diversify its revenues beyond Europe at a time when US sanctions have torpedoed ambitions in Iran and the Chinese auto market has slowed considerably. What kind of cars will be sold? What will be the silhouette? Will Peugeot work through existing dealerships, an expensive proposition in some key cities, or sell directly to customers and skip certain markets? For now, the automaker isn’t offering many details. “We believe we’re being frugal,” said Larry Dominique, chief executive of PSA North America.

“We believe we’re being very careful and making sure that we do this the right way because new brands entering the US and Canadian market does not happen very often.” Auto experts say the ambitious plan will not be easy to execute. Peugeot plans initially to sell vehicles in the US that are imported from China and Europe. Peugeot plans to launch in a single US state and will then ramp up. The company has identified 15 US states and four Canadian provinces that are especially receptive to imports. Peugeot can compete in these markets with models that have sold well in Europe such as the 3008 and 5008 SUVs.

But the brand’s smaller sedan models, which sell well in Europe, are deeply out of favor in America. Peugeot also could face tough competition from new entrants, especially China, whose groups such as GAC, Great Wall and Kandi plan to market in the US in the coming years. Peugeot exited the United States in 1991, having clearly been surpassed by Japanese rivals. In that year, it sold 3,500 vehicles. Peugeot vehicles triumphed at the Indianapolis 500 three times in the early 20th Century and the brand to this day figures prominently at other races such as the 24 Hours of Le Mans in France.

Italian brands Fiat and Alfa Romeo have had mixed success since being introduced in the US a few years. Sales of Fiats nosedived 43.8 percent in 2018 to 15,521, while Alfa Romeo’s sales dipped 0.6 percent to 23,800. Karl Brauer of Kelley Blue Book warned that Fiat’s performance in the US could be a template for what happens with Peugeot. Fiat “bailed out at roughly the same time that Peugeot bailed out and then it came back into the market almost a decade ago and it’s never really gotten a strong following,” Brauer said. “I think it’s going to be a big challenge for them.”