Why don't French cars use "electrification self-rescue"?

Article by Roomy

Editor | Zhou Changxian

The answer is, it’s not doable.

Before explaining why, let me tell a story from the Hong Kong music industry. In 1988, one of the main characters in “The Battle of Tan and Zhang”, Alan Tam, announced that he would no longer accept awards. After hearing this news, another main character, Leslie Cheung, went backstage to smoke heavily. The following year, he had 33 consecutive concerts at the Hong Kong Coliseum before announcing his retirement from the music industry.

“The Battle of Tan and Zhang” ended, and the music industry never produced another Leslie Cheung. However, the times gave an opportunity to Andy Lau, who had been struggling for years as a seed player. In 1992, the media grouped him together with Jacky Cheung, Leon Lai, and Aaron Kwok as the “Four Heavenly Kings.”

As you can see, becoming a superstar not only requires outstanding talent but also a bit of luck. Singing skills, attitude, and fate are all equally important.

Perhaps the stories of “The Battle of Tan and Zhang” and the “Four Heavenly Kings” have nothing to do with the automotive industry, but for car companies, the fate in the tide of the times is similar. Strength, luck, and fate are equally important.

Herbert Diess, CEO of Volkswagen Group, lacked a bit of fate. In these years of leading Volkswagen’s transformation, the tide of the times actually gave Diess and Volkswagen an opportunity. However, the electric models they invested heavily in R&D never became very popular, and the expected sales were repeatedly replaced by disappointment. This is something that the long-time leader in the fuel car era like Volkswagen cannot tolerate in the long term.

Goethe’s words over two hundred years ago might come in handy for Diess. “Water only releases its energy when it encounters resistance.”

Diess, who was called a “reformist,” has faced many obstacles within the Volkswagen Group. The “water” that drives change never broke through the rocky obstacles. The long-term game with the labor union, the tough cost-cutting plan, the discord with the supervisory board… Any one of these makes Diess’s transformation exploration extremely difficult.

In the end, it is still the pioneer of change, Diess, who lacks a bit of fate. If there were even one ID. series car model that can lead in sales, Diess’s transformation exploration may become a sustainable possibility.“`markdown
However, Bernstein analyst Daniel R. asks believes that Diess’ transformation strategy is a high-risk gamble. “This is a strategy of either winning it all or losing everything.” With all that said, Diess’ abrupt departure is no longer unexpected. As for Volkswagen’s future, we’ll have to wait for his successor, Arno Antlitz, to answer that.

After spending so many words setting up the stage with two storylines, the main topic of this article is about “Why Don’t French Carmakers Turn to Electric Transformation to Save Themselves?”

The Rocks and the Stream

Don’t they want to?

Of course they do not.

Being mercilessly eliminated by the times is something that no enterprise wants, and this is a consensus. However, cruel data shows that 75% of enterprise transformations end in failure, which is knocking on the door of every enterprise leader.

From 2014, when We Xiaoli announced that he would make cars, traditional car manufacturers facing the pressure of transformation have taken three paths.

“All in,” as exemplified by Volkswagen; “dragging their feet,” which is the case for luxury brands, who are undecided between hybrid and electric platforms; and “step by step,” which is the choice of weak brands like Peugeot Citroen, seeming to not follow the trend or compete in the short term, stabilizing traditional advantages, and reopening the traditional fuel economy market. In reality, however, they have little power and can only do so.

In the article “Why Can’t Mercedes-Benz and BMW Get into the Electric Car Industry?” that I wrote last year, I explained in detail the reasons for the “dragging their feet” path. To put it bluntly, it’s that the investment is too large, the frontline is too long, and the outcome is uncertain.

Volkswagen has the capital for “All in”, but after several years, it still hasn’t “pulled ahead,” and weak brands have no choice during difficult times. After attending the Dongfeng Citroen Tianyi BEYOND launch event, I only felt this more strongly.

Let’s discuss the answer to “Why” by looking at French cars, which have recently sparked some discussion. Indeed, in the transformation of enterprises, like rocks in a stream, it is either a sledgehammer-like breakthrough or a prolonged tug-of-war.

The topic of how French cars have risen to prominence seems to have not been mentioned for a long time. However, as Guangzhou-Fiat-Chrysler has experienced factory closures and massive losses, and has officially begun its journey toward delisting after 12 years, the topic of French cars is once again being brought to the forefront.


“`The reasons for delisting have been analyzed from various perspectives, and the result is not surprising. It was predetermined that GAC FCA’s delisting was inevitable when the share transfer plan between Stellantis and GAC Group regarding GAC FCA did not make any progress. In March of this year, Stellantis released its 2030 business plan, which clearly stated that a “light asset” business model would be adopted in the Chinese market.

As a combined entity of PSA and FCA, Stellantis is not a formidable force, but a means for survival and profit in seeking security in numbers. Of course, it is not without transformation, and the original purpose of coming together was to respond to it.

From the plan, it can be seen that Stellantis is taking a “half-hearted” approach.

Stellantis plans to have over 75 pure electric vehicle models by the end of 2030, with global sales exceeding 5 million units per year. All cars sold in Europe will be pure electric vehicles, and 50% of those sold in the United States will be pure electric vehicles.

Clearly, in this transformation plan, new energy vehicle models are mainly targeted at the European and North American markets, excluding the Chinese market and, more bluntly, the Dongfeng Peugeot-Citroen brand, which after the withdrawal of the DS and Renault brands, can be said to be the sole representative of French cars in China.

However, in the strategy adopted by Stellantis, Dongfeng Peugeot-Citroen has been assigned the role of “light asset”. Stellantis plans to use a light asset business model to reduce fixed costs and achieve net revenue of €20 billion. This plan means that Stellantis will not be investing heavily in the intelligent transformation and electrification of Dongfeng Peugeot-Citroen in the short term.

It is now clear why Dongfeng Peugeot-Citroen does not have a proper electric vehicle in 2022. For example, while Dongfeng Peugeot has introduced three PHEV models and one pure electric car E2008, the pure electric car E2008 is based on the CMP platform, which is known as the “oil-electric coexistence” platform, though officially.

Criticism has erupted, with many saying that Stellantis has no idea about the Chinese market. Stellantis CEO Carlos Tavares has said, “For FCA and PSA prior to the merger, China has always been a challenging issue.”

Not understanding the Chinese market is perhaps a common problem for French car manufacturers. However, in the eyes of “AutocarMax,” Stellantis group is not unaware of the current environment, and the choice it has made is simply out of necessity.

Returning to Volkswagen, despite its financial strength, it cannot penetrate the Chinese market as a “reformer of intelligence,” not even with a single blow. Stellantis, which lags far behind in terms of product, finance, and even compared to Volkswagen, can only choose to explore transformations in traditional fields and focus on maintaining stability in the Chinese market, at least, to allow the French cars to regain its competitiveness on the main stage of the market.

Whether this is the right or wrong route for Stellantis to take remains to be seen. The reasoning behind their decision can be summarized in two words: “no money.”

Living First, Innovating Later

Many say that supporting transformation takes courage. Especially when the line between new energy and traditional fuel vehicles is becoming ever-clearer, French car manufacturers are still exploring fuel vehicles in the Chinese market, showing that they do not understand the Chinese market well enough.

Regarding the transformation, there is a common saying: “Failure to change leads to death, while changing leads to seeking death.”

For Stellantis group, they do not want to die, but they also cannot afford to gamble. Giving up fuel vehicles in China would result in the waste of the huge research and development costs for these car models, comprehensive supply chain transformation, and a significant amount of time and money. Furthermore, Stellantis is currently not capable of doing so. The transformation in its euro and American markets is still under exploration, requiring a considerable amount of money. In the Chinese market, it plays the role of the “provider of transformation funds,” and enormous challenges lie ahead before transformations can achieve success. “Seeking changes and innovations” is more than just a slogan.

Of course, all of this could not happen without money.

Moreover, the planning of different technological routes for the global market has a lot to do with the French way of thinking. As novelist Emile Montegut said, “No other people place so much weight on abstract concepts.” In other words, some ideas are taken for granted.

After so many years, it remains the same, as can be seen from Dongfeng Citroen’s example.

After reaching a peak annual sales volume of 700,000 cars in 2015, the progress of Peugeot Citroen in the Chinese market plummeted, and by 2021, the market share of French cars in China had plummeted to only 0.4%. This highlights a significant problem: Peugeot Citroen lacks a long-term vision, as they shift from strategic expansion to strategic contraction.

## Chinese Text

无论东风雷诺、长安 PSA,还是神龙汽车,都是因为过于追求短期利润回报,以至于,造成了品牌力缺失、王牌产品欠缺、产品力不足等各种问题,且久久得不到解决。在雷诺败走中国之后,法系车仅存的希望自然就落在了神龙汽车身上。

在生存线挣扎的时候,电动化转型反而不是法系车的当务之急,如何活下去才是。从东风雪铁龙天逸 BEYOND 上市,也能看出法系车在中国市场想要走的一些路。

「我们要留在中国,我们需要找到一个成功的方案」,这是此前东风雪铁龙团队说过的一句话。

目前来看,能带给东风雪铁龙一些信心的车型,就是雪铁龙凡尔赛 C5 X。数据显示,今年上半年神龙汽车累计销量为 56,370 辆,累计同比增长 39%,但是要达成 17 万辆的销售目标,必须有另一款车型做支撑。无疑,天逸 BEYOND 是东风雪铁龙最好的选择。

东风雪铁龙品牌总经理毛创新希望用一个坚持舒适的、向年轻人靠拢的形象出现在大众视野中,再次复制凡尔赛的成功。这一步,走得并不算冒险,其实对于东风雪铁龙来说,也没有多余的机会给他们冒险了。

看得出来,毛创新对于天逸 BEYOND 是有信心的。也是因为现在的东风雪铁龙,有两个明显的改变。或者可以说,改掉了以往的两个大毛病。

其一,法方在产品定义上不再以 「主导」 的形式干涉,不再以欧洲为中心进行全球化,而是让中方团队做主。这一点改变,其实并不容易,一直以来在批判法系车的时候,都会有这样一句,「法国人不懂中国市场,陈旧的造车理念,难以造出符合市场期待的产品。」

其二,经历过凡尔赛之后,东风雪铁龙在进行产品定义上不再是 「我们觉得消费者……」,而是在新车的研发、设计与定价上,都能够让 「从用户出发」 不再是一句空话。

在接受采访时,东风雪铁龙市场营销副总经理屈洪宇也认为,最大的变化是从凡尔赛 C5 X 开始的,改变了以往法系车的定价策略,天逸 BEYOND 延续了 「真正为客户带来利益和价值的定价方式」。

English Text

Regardless of Dongfeng Renault, Changan PSA, or Dongfeng Peugeot Citroen, they have all pursued short-term profit returns, leading to problems such as lack of brand power, lack of flagship products, and insufficient product competitiveness, which have yet to be resolved. After Renault’s failure in China, the only hope for French cars remained in Dongfeng Peugeot Citroen.

When struggling to survive, the transformation to electrification is not the top priority for French cars. The routes that French cars want to take in the Chinese market can also be seen from the launch of Dongfeng Citroen C5 X.

“We must stay in China and we need to find a successful solution.” That’s what the Dongfeng Citroen team said before.

Currently, the model that can bring confidence to Dongfeng Citroen is the Citroen C5 X. Data shows that in the first half of this year, Dongfeng Peugeot Citroen sold a total of 56,370 vehicles, a year-on-year increase of 39%. However, to achieve the sales target of 170,000 vehicles, there must be another model to support it. Undoubtedly, the Citroen C5 X is Dongfeng Citroen’s best choice.

Dongfeng Citroen’s brand general manager Mao Chuangxin hopes to use an image that adheres to comfort and is closer to young people to appear in the public’s vision, replicating the success of the Citroen C5 X. This step is not risky, and there is actually no extra opportunity for Dongfeng Citroen to take risks.

It can be seen that Mao Chuangxin is confident in the Citroen C5 X. It is also because Dongfeng Citroen now has two obvious changes, or it can be said that it has changed the two big problems in the past.

First, the French no longer intervene in product definition in a dominant form, no longer globalizing with Europe as the center, but letting the Chinese team take the lead. This change is not easy, and there has always been a sentence in the criticism of French cars, “The French do not understand the Chinese market, and their outdated car-making concepts make it difficult to produce products that meet market expectations.”

Secondly, after going through the Citroen C5 X, Dongfeng Citroen no longer defines products as “we think consumers…”. In terms of the R&D, design, and pricing of new cars, “starting from users” is no longer an empty statement.

In an interview, Qu Hongyu, the vice president of Dongfeng Citroen’s marketing and sales, also believes that the biggest change started with the Citroen C5 X, which changed the pricing strategy of French cars in the past, and the Citroen C5 X continued the “pricing method that truly brings benefits and value to customers.”

“Reducing ‘internal friction’ in product pricing, eliminating internal competition, and hoping to provide customers with a transparent pricing experience,” said Qu Hongyu. The change in pricing strategy is aimed at avoiding customers’ impression of “wait and buy later for a price drop” with French cars. The resilience of market prices for the Citroën C5 Aircross also demonstrates that this strategy is taking effect.

However, in addition to comfort as the core selling point, another important product feature of the Citroën C5 Aircross is the in-car entertainment system. The entire line comes equipped with a 10-inch floating high-definition touch screen display, a 12.3-inch theater-style LCD digital instrument panel, and the C-CONNECT 3.0 BEYOND interactive intelligent network system jointly developed by Dongfeng Citroën, Huawei, and China Unicom.

Regarding actual user experience, the evaluation by “AutocarMax” is that there are praiseworthy aspects of the Citroën C5 Aircross, but there is also much room for improvement. Especially in the current irreversable trend of intelligentization, both the technology accumulation and the strategy planning for Dongfeng Citroën need to be more clear and faster.

Slow progress in introducing products and technology has long been a criticism of French cars. Although Dongfeng Citroën has some plans for electrification and aims to achieve 100% electrification by 2025, given the current pace and Stellantis’ transformation focus, achieving the plan is not realistic.

The situations with Dongfeng Peugeot and Dongfeng Citroën are similar and will not be repeated here. Regardless of the pace of transformation, the most thorny issue for DS Automobiles at the moment is to pick up the surgical knife to remove deep-rooted defects and revitalize the brand and product strengths. Only when the brand power returns to the racetrack can there be a foundation for transformation.

This is also why “AutocarMax” believes that the path DS Automobiles is currently taking is not wrong, and it has also corrected the aggressive strategic fault and learned to be down-to-earth. The launch of the DS 7 CROSSBACK also aims to “surpass” its past.

“Do what can be done, do it solidly,” Qu Hongyu believes that only by taking this step well, can the next step be taken. If the foothold is not stable and transformation is rushed, it may be a losing proposition.

After all, there is still some time left for French cars to save themselves in the twilight of the era of combustion engine cars.

In Conclusion

Previously, German economist Ferdinand Dudenhöffer criticized Renault’s withdrawal from the Chinese market.

“German car companies are actively exploring the Chinese and Asian markets. Volkswagen, Daimler, and BMW all regard China as their most important automobile market. Renault’s abandonment of the Chinese and Asian markets is the biggest mistake and an anti-example for us. The European automobile market has gradually shrunk in recent years and will further deteriorate after the pandemic. It will be very difficult for Renault.”The same logic applies to Peugeot and Citroen. As the sole representative of French cars in the Chinese market, they cannot survive the current transformation wave alone. Stellantis still needs to come up with more localized strategies in China to cope with the present and the future. After all, “penny wise and pound foolish” stories are prevalent everywhere.

The direction must be clear and the strategy must be stable, and haste makes waste.

Going back to the beginning of the article, to become a superstar, one must have outstanding abilities and experience years of hardships. Diess has already written the answer to the challenge of the Volkswagen transformation with his own honors and disgraces. If the weak French cars want to embark on the path of transformation, they must be patient and accumulate experience.

However, a proactive attitude towards innovation is also necessary; otherwise, they will be grabbed by the AB side of the era.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.