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PSA DS upscale line off to a slow start as a standalone brand

Vehicle sales at Citroen’s upscale DS line, which became a standalone brand on June 1, fell during the first half, hit by an aging product lineup and tougher competition from refreshed rivals such as Mini.

DS global sales fell 10 percent to 63,789 through June. The biggest decline was in Europe, where volume dropped 21 percent to 50,056 units. A bright spot was China where first-half DS sales were 10,482 units compared with 957 during the prior-year period.

PSA/Peugeot-Citroen launched the DS line in 2010 to help the automaker boost earnings by attracting customers willing to spend more money for high-spec models.

The brand has expanded from the initial DS 3 and DS 3 Cabrio subcompacts to offer the DS 4, DS 5 and DS 5LS compacts.

The next addition will be the China-only 6WR SUV, which was unveiled at the Beijing auto show in April.

Expanding DS sales is a crucial part of PSA CEO Carlos Tavares’ Back to the Race turnaround plan for the automaker. He named PSA’s former director of group strategy, Yves Bonnefont, to the newly created position of CEO of DS in June. Bonnefont is tasked with elevating DS from a tiny-but-successful division of Citroen to a global powerhouse.

Citroen said first-half DS sales in Europe were hit by a contracting market in the segment where the brand competes, especially in France.

“DS is moving forward with the launch of a new front light signature for DS 3 and DS 3 Cabrio, new limited editions, new engines and its first SUV for China in September,” Citroen said in a July 21 statement.

IHS Automotive analyst Ian Fletcher said Tavares’ anti-discount strategy and an aging lineup likely hurt DS sales. “The lynchpin DS 3 is five years old now and is a very familiar sight,” Fletcher said. “It is facing vehicles that are benefiting from updates, such as the refreshed Mini, or are being heavily pushed by rivals, such as the new version of the Fiat 500.”

Analysts expect the appointment of Bonnefont as CEO of DS to bring benefits.

“The new CEO could help if he understands that the success of DS will come if the premium mentality is applied on DS,” said Jamel Taganza from analyst firm Inovev. “It means, in addition to becoming a standalone brand, that DS must also have an independent technical center, for example.”

IHS Automotive’s Fletcher agreed that making DS a standalone brand was a good move. “The launch of the DS nameplate under Citroen enabled PSA to dip a toe in to the premium sector, but ultimately they were still Citroen products directed by requirements of that brand,” Fletcher said. “By spinning DS off and appointing its own CEO, PSA gives it a greater singularity of concept in the pursuit of a widening its customer base in the premium sector.”

PSA expects China to be a major market for DS, helped by ever-increasing demand for premium Western products. PSA opened a joint venture plant with Changan Auto in Shenzhen, China, in September to build the DS 5. Inovev forecasts that the factory’s annual production will rise to 200,000 units by 2017 from 50,000 in 2014 and 100,000 in 2015.