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Cover: Peugeot/Pierre Louis Colin

According to UK managing director Pierre Louis Colin, many dealers in the Peugeot network were angry and disappointed that a handful of their peers broke ranks to speak to AM about relationship problems and profitability concerns.

In contrast, AM’s own conversations with dealers following the lead news spread ‘Peugeot faces dealer council revolt’ in the February 22 edition suggested many were delighted that the issues had been aired.

“It forced Peugeot to talk to us,” said one.

The reality is probably somewhere between the two viewpoints.

Much of the network’s anxiety and displeasure centres on changes Peugeot made to bonus payments, sales targets and customer satisfaction standards towards the end of last year – changes it says were essential to stem a slump in new car sales and to haul the business into the 21st century.

“With the same habits and traditions we went from 8% market share to 6%,” says Colin.

“We were also one of the worst in customer service – it was not acceptable. We had to revisit the way the brand operated.”

Colin is genial and softly spoken, but that masks a steely determination and an unshakeable belief.

“We introduced some massive changes last December in the way we wanted to parade the brand.

We changed remuneration and added CSI – we had a new pack of rules between manufacturer and dealer after years of no change.

It was absolutely necessary to address the decline.”

He concedes that to introduce major changes in a short time span creates worry and dissatisfaction.

“When you shake the tree, it is uncomfortable for some,” he says.

“We didn’t expect stand-up applause for these actions; we knew it would be difficult. But we couldn’t go on in the same way as we were.”

Peugeot acknowledges that its changes are “probably a little bit late compared to other brands”.

Indeed, sister brand Citroën UK went through a similar process two years ago that ignited a strong reaction from the dealer council.

#AM_ART_SPLIT# According to Citroën dealer council chairman John Miskin, in those situations it is crucial for dealers to keep talking to the manufacturer.

The Citroën council did and the relationship is coming good.

“The worse thing you can do is to walk away,” Miskin adds.

Rod Philpot, Peugeot director of network development, accepts the criticism that the carmaker could have done a better job of communicating the changes to the network.

“We should’ve taken people through it in the middle of last year and made sure everyone from our field team to our dealers really understood the changes and how they impacted them,” he says.

“But we had to take action and we now have the right way forward.”

Peugeot held the upper hand in its discussions with dealers when it let slip to the media last summer that it would be restructuring the 300-strong franchised network in the lead up to Block Exemption 2010.

Up to 10% of dealers would go, Colin told journalists, although he later tried to recant the statement.

It turned out that the original stories were accurate.

In April, Peugeot notified more than 30 retailers that they didn’t form part of its future plans – formal letters of termination have been sent out this week. Most of the 30-odd outlets are unprofitable.

Around half of them are in the wrong location.

Peugeot expects that some of the rural sites will become authorised repairers while others will switch to become used car specialists.

They have two years to decide.

“We are picturing with our dealers the future; what retailing is about in 2015,” says Colin.

“We have looked at the motor retail trends – the Audis and Minis have been aggressive in the marketplace.

In order to compete, we have to have the equivalent.

All our dealers have plans – it might take three years to get there.

Some is process, some are soft changes and some will need refurbishments.”

  • Read this story in full in the May 30 issue of AM. To subscribe to AM magazine click here or call 01733 468659.
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