Professional Documents
Culture Documents
Group 1B
Aditya Singh ,Pratik Pednekar, Siddharth M, Arani Halder, Anand Shah
1 About Peugeot
Founded in 1896, Peugeot S.A. engaged in manufacturing and sales of automobiles and automobile
parts until 1965, when it was transformed into a holding company as part of a legal and financial
restructuring of the Group. Its operating activities were taken over by a subsidiary, Automobiles
Peugeot.
Year on year motorcycle registrations have increased in most of the key European markets, including
Spain (+ 19.8 percent), UK (+11.8 percent), Germany (+8.1 percent), France (+3.7 percent) and Italy
(+2.1 percent).
The moped market continues to shrink. The EU saw sales down by -9.8 percent for the first ten
months of the year (311,630 units compared to 345,540 during the year ago period), with
registrations down in the UK (-1.9 percent), Spain (-5.2 percent), France (-8.3 percent), Germany (-
14.4 percent) and Italy (-15.8 percent).
The two biggest trends that are visible are the fact that PTW share is increasing despite a decrease in
MOPED share therein.
2.1 Sales trend in primary markets (Europe as a whole for Peugeot- declining
sales). Graphs of industry sales.
In a challenging global economy, European demand for scooters fell for the fifth consecutive year. In
all, the market has contracted by over 41.3% since 2007 and fell by 14.5% in 2012 alone. Peugeot sales
and market share in Europe have fallen steadily from 2010 through 2013, before sales rebounded
since 2014, although market share continued to dip. The French lion brand is facing the same challenge
as most of its mainstream competitors: the shift towards premium or low cost during the financial
crisis.
Arguably, this is a double-edged sword. You see, when the European market for two-wheelers went
under, Peugeot sank with it. Since 2007, the market has shrunk by 45 percent, falling 13 percent in
2013, according to a Peugeot Scooters spokesman. From 230,000 units in the year 2000, Peugeot has
come down to selling 79,000 units in 2013 and the bottom may not have been found yet.
Peugeot, which has struggled to compete with European scooter leader Piaggio and Co. SpA of Italy,
closed an engine plant for the scooter business at the end of 2012, concentrating production at a
factory in Mandeure in eastern France. Peugeot has 13 product lines, seven engine capacities ranging
from 50cc to 400cc, and two manufacturing plants, including a joint venture in China. Peugeot's
turnover at euro 99 million (Rs 762 crore) was the same as the two-wheeler division of Mahindra,
though the Indian company's unit sales at 213,000 units were double those of the French company.
2.2 Reasons for the (downward) trend and forecast
This sharp decline in sales stems from the brands limited exposure outside the European market and
is an indicator of Peugeots failure to spread its presence outside Europe. The brand is the strongest
in its homeland and accounts for more than 15% of the French market. Peugeot derives 70% of its
sales from the European market where it has a 9.3% market share. It is fifth in the pecking order in
the European market, a market that now accounts for less than 4% (by volumes) of all two-wheeler
sales globally, sales having fallen from a peak of more than 1.6 million units per annum about six years
back to less than 600,000 units last year.
Number two in Europe behind Italy's Piaggio (PIA.MI), Peugeot Scooters has been hit by a sales slump
caused by the economic crisis, helmets becoming mandatory in the key Italian market from 2000 and
a boom in mobile phones that has eaten into the budgets of young people.
PSA-Peugeot-Citroen is a large group fighting multiple battles on many fronts. In such a situation, the
small two-wheeler business is a big distraction for the group. PSA would have preferred to exit the
business altogether. The scooter business was a drag on PSA and they are working on a solution to
end the burden.
9%
6%
59% 26%
Peugeot follows a premium positioning strategy for its products. The product line of the company
and its premium nature was a complement for M&M as its was soon going to launch its first
premium class product called Mojo. In addition to this, the current team was more than 40 years old
and organizations learn, transcends generations in the company and knowledge accumulates. In that
sense, Peugeot Motorcycles has been developing two-wheelers for around 116 years. Stimulating
and rewarding driving, a sleek design and uncompromising quality are the brands commitment to its
customers and contribute to the emotion that each PEUGEOT provides. PEUGEOT combines Design,
Style and Emotion in all areas, with its ambition to be a high-end generalist brand.
The following is a brief of strengths and weaknesses that Peugeot had at the time of alliance
Strength Weakness
Technology Weak Supply chain
116 years of experience High Staff Turnover
Customer Loyalty Lack of scale
Unique Products Poor Customer Service
Below, we discuss some of the factors needed to succeed in the industry, which of these factors
Peugeot has, and which of these it should acquire through an alliance.
Some other synergies that can be expected to be gained from an alliance are:
Joint purchasing: Will lead to an increase in the bargaining power of both the partners.
Sharing production facilities: With an alliance with an overseas player, specifically one in a
developing country like India, each partner will be able to produce its vehicles in the destination
market (e.g., Peugeot can produce using Mahindras facilities in India to sell in India and
neighbouring geographies).
Common distribution networks with separate front-ends: By leveraging the existing distribution
network of one partner, the other can enter the market without having to make significant fixed
cost investments.