The Business Car Files: DS Automobiles
06 October 2020
Author: Simon Harris
DS Automobiles, PSA's technology leader, is on course to meet the EU's carbon emission targets as it establishes itself as a premium brand. Simon Harris talks strategy with UK MD Alain Descat.
When we talked with Alain Descat late in July he was keen to share the news that DS Automobiles was the only multi-fuel premium car manufacturer to be comfortably in line with the EU average CO2 emissions target.
He told us the DS average for the first half of 2020 was 79.9g/km, while other premium car manufacturers (whose ranges were not solely electric) had not succeeded in going below 110g/km.
Manufacturers must meet an average of 95g/km this year for the cars they sell or risk fines imposed by Brussels. There is a formula that rewards the sale of pure EVs, and DS Automobiles has the DS 3 Crossback E-Tense, which is purely electric, and the DS 7 Crossback E-Tense, which is a plug-in hybrid, as well as petrol and diesel variants in both ranges.
"I guess that puts us in a nice position," says Descat. "We understand the fact that DS has a smaller range than most other manufacturers, but it's important at this stage. We often take a few steps back from the present and think about why we created DS Automobiles in 2014.
"The goal was to compete in the premium market, because up to then we didn't have any premium models. In the past Peugeot had the 607 and Citroën had the C6. They were great cars, but their position was not relevant enough to the premium audience.
"Roughly 15% of the car market worldwide is premium, but half of the profits in the automotive industry are in the premium sector. So it's understandable that PSA, which has ambitions to be a global car manufacturer, should want a premium brand."
The task for DS is to get PSA into the premium segment and be a conquest brand. The secondary target is to be a spearhead for new technology in the group - it appears in DS first and then rolls out to the other brands. That includes the transition to cleaner energy sources.
"That was embedded into DS Automobiles since the beginning, and so when you look at the results of the first half of 2020 and CO2, it's quite pleasing that we are delivering on that target.
"And an enabler of that has been the brand's presence in Formula E. We were among the first car brands to participate in Formula E, and the races are starting back in August."
After a coronavirus-delayed climax to the 2019-20 Formula E season, the final six races were held in Berlin in August, and DS Techeetah won the team championship, with its driver, António da Costa, also winning the drivers' championship. DS Techeetah won both the team and driver championships in the 2018-19 season too.
"My point here is Formula E helps deliver some of the benefits of the technology into the road cars of the manufacturers involved. What we've learned is the regenerative braking techniques have been valuable in our electrified road cars. The car that wins in Formula E is the one that harnesses the energy in the best way.
"That is now being carried over to the DS cars, and then through the PSA Group as a whole."
Descat claims the original vision is now being delivered, and the results linked to EU-wide targets are verification.
He says the proportion of DS E-Tense models is high, accounting for one in three models across Europe and around 25% overall in the UK, although in the corporate sector E-tense takes a bigger share than in retail
He adds: "Since we are a new brand we are still building awareness, but it's even more challenging in the UK market where the premium market is strong.
"It's important for us to be able to get out of the mainstream and try to focus the attention on DS as a new brand. We've been able to do that a lot faster as a result of E-Tense."
Descat says the DS brand is at "the beginning of a long journey" that could take 20 to 30 years to become accepted as a fully fledged premium brand.
With the first DS models (those described by Descat as "born DS" as opposed to the ones that were part of the Citroën line-up) the company was working on the retailer network.
To be a DS retailer, dealers had to invest in a new-look outlet to showcase the new products. All of the dealers who sold Citroën DS models terminated, and by mid-2018 a new network of 25 dealers began to sell the new DS 7 Crossback.
Removal of the DS 3 hatchback from the line-up - the most popular car to date in the DS range - and all of those dealers meant sales plummeted through reduced coverage.
Now DS has 35 retailers, and Descat says it was important to move away from the 'DS corner' within Citroën showrooms to establish itself as a premium brand.
Even though some of its outlets are adjoining Citroën showrooms, the DS colour scheme is different on the outside and inside, and there is a dedicated entrance.
"We need visibility because the market is so strong, and we have to be targeted in our approach," says Descat. "It will take time, but we are seeing some success."
In Europe the market share of DS Automobiles virtually matches that of Lexus and Jaguar, thanks in part to particularly strong sales in France.
The brand currently has a two-model line-up, but it will expand further in 2021 with a vehicle that could face a challenge even bigger than that faced by its present range.
The DS 9, unveiled in March, will compete in a sector where any vehicle outside the three German premium brands struggles to register.
An executive saloon - and an alternative to the BMW 5 Series, Mercedes-Benz E-Class and Audi A6 - the DS 9 might be helped with its focus on plug-in hybrid technology from launch, as the E-Tense derivatives will play a major role in its UK line-up.
At first, the DS 9 will be offered with an E-Tense plug-in hybrid powertrain, comprising a four-cylinder turbocharged petrol engine with an electric motor combined to deploy 225hp and be capable of travelling between 25 and 31 miles in zero-emissions (WLTP) mode thanks to an 11.9kWh battery.
The line-up will shortly afterwards be topped by two more E-Tense power units - the first with 250hp, front-wheel drive plus increased range capability - and the second a 360hp with four-wheel drive.
"The main role for the DS 9 is to position the brand and show we are a serious competitor in the premium sector," says Descat.
"It will really demonstrate the sophistication and elegance, the real 'Frenchness' of what we can deliver. It will have one of the most exclusive interiors on the market.
"If you want to be a global manufacturer you need to have a premium brand, and if you want to be a premium brand you must have a product in the E-sector [executive car segment]. We will have very reasonable targets for this model because we don't want to do anything stupid in terms of volume, to harm our residual vales.
"We've hit a few walls in the past in this segment in the past with French brands. We need to break this prejudice we have in the UK against French brands in the premium sector.
"We've some stunning large cars within the PSA Group. I think everyone recognises what a good product Peugeot's 508 is now, for example.
"We come with a fully premium proposition - very exclusive and packed with technology. We need that car for the sake of our network, for us, and to show our customers that they can ride in an amazing French E-segment car."
Descat shows the journey the brand has made during the past decade, from the 'born Citroën' DS models to the new line-up by revealing the average price paid by customers for models then and now.
"When we sold the DS 5, the average price paid was ?35,000 (£32,750). With the new DS 3 Crossback - a much smaller car - our average is ?32,000 (£29,000), and the DS 7 Crossback is ?48,000 (£43,600).
"Customers have been ready to pay the price to get into our cars. We're not selling them cheap - they have the equipment and technology to position them as premium products."
It is also seeing success with its 'virtual showroom' for people searching for the DS brand UK website, with DS 'experts' based at the firm's Coventry HQ available to highlight aspects of the cars and answer questions.
"We're also using these tools more with B2B customers, and propose to have meetings with fleet managers, and if they want to discover DS we put them in touch with the experts in the virtual showroom. We have a 'fleet concierge' tasked with presenting the brand to 50-plus fleets.
"We have been able to accelerate some of these activities during the Covid crisis - staying remote but relevant."
Brand awareness is the biggest challenge, says Descat, and he continues to ensure the message and brand values are communicated effectively to leasing firms to maintain competitiveness and protect RVs.
"It's not just about investing in the cars; it's about ensuring the whole cycle behind it is not pulled by volumes. We don't manage DS in volumes. I can't afford tactical actions to drive volume - we need to think in the long term. We must be patient."