Securing Rock Solid Presence from Small Market ShareMon, 09/01/2014 - 10:00
Peugeot Mexico’s Director General, Raúl Peñafiel, states that Peugeot has changed its attitude concerning the Mexican market. “Four years ago, Peugeot had a particularly Eurocentric way of thinking. Fully entering the global environment forced us to make certain adaptations,” he explains. “We realized we were arriving too late to the markets and sometimes released products which were not ready for the conditions of markets like Mexico, Chile, or Nigeria.” He explains that Peugeot began a new chapter four years ago, with the French automaker vowing to improve its positioning in the global market. In 2012, Europe accounted for 37% of Peugeot’s sales, which reached 43% in 2013 and is forecasted to increase to 50% in 2016. “This does not mean that Peugeot is focusing too much of its attention close to home as its annual global growth of 10% in 2012 was also fueled by sales in China and the Americas,” explains Peñafiel. Where Argentina grew 28% in 2013, Peñafiel states that the sales targets for Mexico and Chile were to increase sales by 40% in the same year.
Peñafiel states that these high growth expectations are accompanied by a new strategy for the launching of new vehicles, one in which Mexico has been included from the very beginning. The particular demands of the Mexican customer were taken on board for the launches of the Peugeot 208, 301, and the 308, winner of European Car of the Year, as well as the Tepee multi-purpose vehicle. The fall-out from this strategy led to a situation where Peugeot’s dealers in Mexico grew worried that repairs and aftermarket services had dropped. “This indicates that the jump in quality and our adaptation to Mexico’s market conditions were successful. This has become a challenge for our dealers since they have to sell a lot of cars to compensate, but it is good news for us,” says Peñafiel.
However, Peugeot still has ground to make up in Mexico in terms of brand penetration, as opposed to its well-known status in Argentina where it claims 10% of the market. In Mexico, Peugeot’s market share is just 0.6%. Part of Peñafiel’s priorities for the future is to roll out a brand image strategy to increase sales. Executing that strategy in Mexico differs widely from Peugeot’s strategy in markets where it is already strong. “Other markets involve a lot of benchmarking. There are instances where Peugeot is the leader and everybody looks at what we are doing. In other cases, we view what others are doing. Although Mexico is heavily influenced by the US, the Mexican customers also look to the example of Europe. We find a space in the market among those who are keen to drive a different car.” Peñafiel explains that it is the unique advantages of the Peugeot brand that will attract Mexican drivers, listing as advantages that they will find small and reasonably-priced cars, loaded up with the latest safety items and can rest easy in the knowledge that they will be driving a rare car in this market. The ideal customers for Peugeot are young, middle-class professionals, a more discerning level of clients for whom the European range of vehicles is thought to be best-suited.
To maintain this level of proximity with the customer, Peugeot had to make sure that its quality processes and dealers were rock solid. To ensure this solidity is maintained, it has rolled out the “Peugeot Cumple” program, which sees all its dealers having to be certified by Deloitte on certain quality standards. “Through those standards, they must follow our processes in their workshops and in their commercial activities. If they do not achieve this certification, their profitability will suffer. If they still do not achieve it after a year, they lose our business,” explains Peñafiel. He adds that this complex system does not intend to punish the dealers but is a part of Peugeot’s capacitation program. This program has also sparked collaboration with the Technological Institute of Queretaro, in which a virtual workshop was created for use in industrial and engineering classes. The reach of this resource has been extended outside the academic sphere as it is also used to train Peugeot’s aftersales team. This capacity building program, coupled with Peugeot’s modest size in Mexico, has allowed its dealers in Mexico to have the parts in stock to meet 96.7% of customer problems. This even beats out the objective service rate of 95% Peugeot has achieved in France. For the remaining 3%, Peugeot is able to dispatch the spare part and have it at the right distributor in 72 hours.
To cut down on any problems, Peugeot is seeking to equip its vehicles in Mexico with the latest safety solutions but this has not always been a priority for the Mexican consumer, according to Peñafiel. He admits that not all Mexican consumers are aware of the importance of safety, but this is no real concern for Peugeot which makes sure to include ABS, Isofix systems, double airbags, and emergency brake assist in its vehicles. “You cannot find these systems in our competitors’ standard range of cars. Peugeot operates within 1% of the market but the customers that buy our vehicles will always have access to both safety and comfort. Utilizing technology to create a difference in the brand is crucial.” The carmaker’s latest slogan “Motion & Emotion” is tied into its vision of a new driving experience. For example, Peñafiel notes that Mexican drivers of the 208 have noticed its cockpit is organized differently than the Mexican norm and the driving position is also different. He states that Peugeot knew this design would stand out in Mexico from the very beginning. “It may be seen as a risk for us, but it will be a real advantage in Mexico.”