Citroen UK boss on why firm will no longer be discounting

Just one month before the pandemic struck, Eurig Druce became managing director of Citroën UK. He had previously held the position of sales director since 2016 and worked within the PSA Group (now part of Stellantis) since joining as a trainee in 2001, chiefly in sales and aftersales field roles. Here he talks about Citroën's shift in focus to profitability and how brand perception, retailer behaviour and more have changed to reflect that - and why there’s more good news to come. You started as MD just before the pandemic. How was that? “I started officially in February 2020. Five weeks later, I was packing everything away, expecting to be out of the office and stuck at home for three weeks. Let’s just say that what followed was an interesting time.” You didn’t hang around in implementing change, though. In fact, you describe the pandemic’s timing as lucky? “That’s right, lucky – obviously respectfully to the wider issues of the pandemic and not in the obvious sense of lucky. "In February, I went to Paris to get a feel for where the brand was going, including seeing all the future models. I left with a feeling that there was a clear mismatch between the quality of what I had seen and the quality of the business we were doing in the UK. “Our residuals were behind the market average, we did a lot of rental business that pressurised our used pricing and then there was the age-old image of being the company to come to for big discounts. It just didn’t match. “On the plane home, I made a decision that we needed a drastic change of course. We started to plan that - and then the pandemic began. But of course where I was lucky was that the shutdown gave us a chance to really plan it.” Describe that period to us? “In terms of normal business, we were operating at walking pace. Yes, we sold some cars online and so on, but it was in tiny volumes. But we spent months drawing up a plan to change our position, which we then formally presented in October.” For Autocar Business webinars and podcasts, visit Autocar Business Live What did you discover? “We identified that UK buyers weren’t so connected to the brand as perhaps they were in France and Spain; that needed work. Then we talked a lot about fair pricing, but we weren’t really delivering it; we were leaders in discounting, according to What Car?’s Target Price. We also saw that our product line-up was too complex; the range was just too difficult to navigate, because there were too many options. “And then there was our retail network. Much of it was outstanding, but we had open points, and some of our partners didn’t want to come on the journey to a point where there was no more high discounting. So we made changes and appointed new partners - and that journey is ongoing as we evolve. "While some manufacturers are decreasing their footprint, I see an opportunity to take ours from the 140 or so outlets we have today to 155 to 160.” Do you look to work with bigger dealer groups to ensure consistent quality? “Not actively, no. We’ve got representation with everything from national groups to regional groups, and we’re delighted with them all. Each has its benefits, and all I ultimately want is investors who do a brilliant job delivering the customer experience. Our surveys tell us we’re improving, both in terms of sales and aftersales.” That also suggests private sales are the focus? “Channel mix is a critical part of our transformation. We had an over-reliance on some of the more tactical channels as a brand, which led to poor residual values. We needed to break that reliance, and the enforced break has helped with that.” Where do online sales fit in? “It’s critical, but only as part of the mix. Our tagline at Citroën is ‘Inspired by You’, and you can’t claim that if you then put your effort into trying to force the customer to behave in certain ways. We have to be about what the customer wants: bricks-and-mortar dealerships if that’s what they want, pure online purchasing if that’s what they want. A mixture of the two as well. That’s what we’re trying to evolve to.” Presumably the key benefit around this is around residual values? “So much stems from that, yes. It not only allows us to reduce lease payments, making our new cars more attractive, but also affects the used-car stock we manage significantly. “If values are higher, the network makes more money per car, and that reduces the pressure to sell more cars, which in itself is a virtuous circle, as having less pressure to sell cars means the network is less inclined to discount them. “Yes, the pandemic has helped in driving up used car prices, but the disciplines we’ve applied will reap dividends beyond that. The spiral of always chasing volume has been broken in favour of sustainable profitability.” You talk about the journey. How long will this take? “Branding takes years and years, but what’s interesting is that we can already see from our brand-metric surveys that we’re picking up pace - and moving faster in the right directions than even some of our European counterparts. We’re not where we want to be, but [on] our image, our reputation for reliability, positive reasons for buying our cars, we’re tracking up. “And it has to be a journey; repeat customers are coming in and wondering why they’re not getting the £3000 discount they got last time. We have to explain that while they aren’t, their monthly payment is better, and that’s because the residual values are better. “It’s important to me that we have internal and external goals. I have absolute confidence that our cars will be good going forwards: four stars and above in every segment. And your reviews will no longer need to mention past residual-value performance or that product quality could be a bit of a problem. That’s just not going to be the case any more. “It’s an important point. The substance that will change those views is coming. I know we have to prove it, but it is happening. We can even measure it; the falls in warranty work we're doing is dramatic. The quality of these cars is incredible, and that message will get through and strengthen our position. “Finally, we have to stay strong. We wrote into our rules that we would never do more than 10% rental. We did 8% last year and we’re already down at 6% for this year - but we have to be firm on that. Likewise, we want to track above the average for retail sales. This year, we will be about 10% above the 2021 average, and that’s very healthy. At the back end of 2020, we reduced our prices and discounting. That was an unusual step, but it firmed up our customer pricing in 2021 and now. These are the foundations we need to make real progress.” Is this just about cars or vans too? “Vans are more of a commodity, in that they're bought with less emotion than cars, but that suits us too. We know the product is good - and on one level is shared across multiple successful brands in the [Stellantis] group - but we can also see that our residual values are among the very best in the segment. In a sector where rational monetary spending predominates, that’s great news: we can offer better value for money. “But on top of that, you can also layer all our brand work, from the way you can buy our vans online or in person, to the service you receive, to our specs being lasered in on providing the best return for resale. Our van business is very successful, and all these actions will make it more successful.” Looking ahead to new launches, the Citroën C5 X is a genre-twisting car in the true spirit of Citroën, but given that, will you be under pressure to meet volume targets? “No - but we do need to raise our game again. We will not risk anything we've gained by trying to force business for the C5 X. They will be made to order; there will be no short-term business. None of our rules will be broken. “And do you know what? The early interest in the car is really, really strong. Buyers like what they see, and I’m confident reviews will bolster that. Sure, it’s not a car you can pigeonhole easily, but it’s a Citroën, and that’s a wonderful thing.” And where does the Citroën Ami fit in? “As you know, the Ami was never meant to come to the UK. But my own instinct was that if Citroën is meant to stand for mobility for all, this was the car to take one bookend. I wanted the full rainbow at my disposal if I was going to fix the image issues. “And the more I looked, the more I realised that there was a real opportunity for Ami. It took a lot of pushing with head office, but eventually I was able to prove the commercial case, and I couldn’t be happier. "It’s not the solution for everyone, but for some people it’s the perfect solution, and that absolutely typifies the Citroën brand. We’ve got more than 2000 paid deposits now and no cars available yet; that’s well beyond my best expectations.” How long will it take from building these foundations to growing? “All I'm claiming is that the foundations are fixed. Now we’ve got to build a big, beautiful house. “We’re building our market share and implementing these positive steps. Citroën's position as a company that can deliver great cars at fair pricing is gathering strength. "Our position as an accessible brand is unrivalled; we have everything from the Ami to the C5 X. Our product line-up is probably as young as it has ever been, and that gives us opportunity. There’s more to do, but we’ve never been in a better position to achieve it.” Where does electrification fit into this? “It’s critical, and our aim is to provide as wide a choice for our customers as possible. Again, we are here to give the customer what they want. “But there is one issue on electrification that deserves more focus. Everyone talks about the range of an electric car, but there needs to be more focus on the efficiency of them. For example, every Citroën is equipped with a heat pump, which means that if you precondition the car before you leave, you will achieve the full range, rather than eat power heating the car up. Some cars - not ours - are incredibly inefficient at that. “Likewise, we need to focus on the charging capability of cars. As infrastructure improves, there should be more focus on cars that can take advantage of being able to add 80% battery charge in half an hour. It’s far more useful than an extra few miles of range you can put in the battery. “You can pay your £70,000 for a 2.5-tonne SUV that will do 400 miles if you wish. But what about £30,000 for a family car that will do 200-250 miles, like our own ë-C4, which can start every journey preconditioned and which can take on 100 miles of range in just a few minutes? We need to think beyond the pure range. “Finally, I do think there’s a case for us to be more flexible in our offering. We’re looking at a lease deal that allows you to buy electric but switch into a combustion-engined car a few times a year, to have the reassurance that you can buy electric without a fear of being compromised when you want a bit more convenience.”