Peugeot hopes to rev up market share

Peugeot is so keen to make a long term impact in the Gulf that it is prepared to lose money in the short term.

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By  John Irish Published  February 29, 2004

When it comes to the Gulf’s car market, one European country clearly dominates in terms of exports to the region. Be it BMW, Mercedes or Volkswagen, the Germans have cornered the market. Whether it’s the sound of the engine purring or an efficient sleek design, the region’s car enthusiasts seem to prefer the Teutonic flavour. So what do you do when you’re one of the most renowned car brands across the world, yet find yourself languishing in the regional market? “The French and British expatriate community know Peugeot, but can you believe there are people here who have never heard of the Peugeot brand before?” says Jamal Sahl, regional director for Peugeot. If that’s not enough, the rise of the Euro against the Dollar theoretically makes European cars more expensive to the market. With all this, you may wonder why the French car giant is even attempting to develop its brand in the current climate. On the contrary, Jamal Sahl gives the impression of a man on a mission. The Gulf, for him and his superiors in Paris, is considered a key market for the future. “We are adopting a new marketing approach,” says Sahl. “For this reason we cannot just look at our business model in the GCC from a financial point of view. It’s a pity, because to be frank with you, we are losing money in all of the GCC markets.” It might sound a little shocking to hear a regional manager speak so openly, but clearly Sahl feels Peugeot’s long-term strategy and planning will come through. The goals set are ambitious. Peugeot is targeting sixth spot in the regional pecking order with 5.7% market share, compared with the current 2.7% . However, the Gallic carmaker’s ultimate ambition is to be the leading European automobile manufacturer in the GCC. It may appear as a tall order, but Sahl emphasises one thing. A loss in short term profit margins will eventually turn into positive rewards with the right kind of approach “It’s a long term policy and sooner or later, the dollar will be reinforced against the Euro and then we will make a lot of money,” adds Sahl. Take the way it has dealt with the dollar’s slide as an example of its approach. Rather than panic and raise car prices to compensate for any potential losses, Peugeot opted to invoice its regional distributors in dollars. “Naturally, it impacts on our margins, but we don’t want our dealers dealing with the currency variation. As a consequence our prices have remained the same, but we felt we had to, as we’re in the development process.” Establishing the brand will take time, but the expansion process has started. Peugeot recently opened new workshops and showrooms across the UAE, as well as one in Kuwait, three points of sales in Oman and five in Saudi Arabia. If raising the image on the street is one thing, taking its communication and marketing onto the small screen is also vital. How often do you see Peugeot products advertised in the media? According to Sahl, however, all that is set to change, particularly with regard the pan-Arab audience. “We want to reinforce our image to the locals, so to do that we started advertising the 307 on pan-Arab television channels.” As long as the Dollar is low, the next few months will continue to be difficult for Peugeot. However, ultimately, as Sahl says, the company is in it for the long run.

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