Peugeot to launch upscale sub-brand.

Yesterday, Peugeot announced that the company will create a new upscale sub-brand under the name hors-série. I know when I first read it, my first reaction too was - horse what? The main idea behind the move by Peugeot is to attract more affluent buyers to the brand as well as to their higher margin upscale models. Peugeot's sister company Citroen too have recently revived the illustrious "DS" badge with a similar motivation behind. The first hors-série model would be the RCZ pictured above.


Citroen DS3

According to PSA/Peugeot-Citroen's brand boss Jean-Marc Gales, there are three price points in the European market: low cost, mainstream and more distinctive. PSA does not have low-cost models while both the Peugeot and Citroen brands cover the mainstream area. The DS and hors-série car lines will expand PSA's coverage into the more distinctive segment.

Hors-série is a French word that means cars built out (hors) of mass production (série). And no, they are not going to translate this into other language for overseas market and the Hors-série brand will be used throughout the world where PSA intends to sell their Hors-série models.

Monsieur Gales mentions that VW uses the German word Das Auto as its tagline in many non-German speaking markets.

Personally I am not sure if that is such a good idea. And I don't think VW's tagline is a very good example too. The French are known to be very proud of their Gallic heritage , culture and most of all, their language. Remember that the mighty Romans took 7 years to bring the brave Gauls, ancestors of the modern day French, into submission. Until today, the French Foreign Legion Légion étrangère is still regarded as the toughest elite armed corps in the world. Enough about history and now that we understood the background and cultural context behind this, let's go back to automotive marketing.

VW did not have a very consistent marketing tagline. It is quite obvious the the tagline "Das Auto" (translates into The Car) does not even sound distinctively German (to a regular man ignorant of European culture, let alone language) to begin with. At one time, VW of America operated with the tagline Drives Wanted. While in Europe the company stuck with Aus Liebe zum Automobil (translates into "for the love of cars"). Even after explaining the meaning of Das Auto, most of the general public are likely to still be confused, probably asking so what about this "The Car." I understand where is VW coming from, they created cars the defined an entire generation in Europe - the Beetle, the Kombi, Golf GTi Mk1. But the general public is not very interested in history, let alone automotive history. They want to buy from an established brand but are not interested in your classic models that petrolheads raved on and on about.

Audi's Vorsprung durch Technik is an exception. Can't really pinpoint why but maybe its the universal ability to link the word Technik with technology. And that magic word, technology, is far easier to click with the lay man's mind than "The Car." And Audi certainly have the credentials to live up to the tagline, Le Mans winnning TDi racers, quattro that revolutionised world rallying, aluminium space frame construction, etc etc. But it is still a rare exception.

Neither BMW or Mercedes-Benz uses German words in their tagline outside of Germany. The Germans are known for their logical and methodical ways, and this can clearly be seen in the way they name their cars. They completely side step cultural and language barriers when selling their cars overseas by giving all their cars alphabet-numerical names. A 5-series is as easily said by a Chinese buyer as well as an American as is a German. So is an E-class. Arabs too won't have any issue with numbers and alphabets. A more premium sub-brand with alphabetical names like M, or AMG or S-line or RS-line would be far easier to remember. To make things more puzzling, all of Peugeot's model line-up have names made up of numerical combinations. So you would expect that the reason in doing so was partly due to language.

When Hyundai launched the Tucson SUV locally, the company had to run a radio ad campaign educating people how the Tucson name is pronounced. Non-Americans would not think of the old Spanish outpost in the desert of Arizona at the mention of Tucson. Most people here still call it "tuck-son." When you need to teach people how to pronounce the name of your product rather than doing the actual act of selling. That's never a good start.

Related link : Peugeot SR1 Concept with removable wrist watch

A front wheel drive BMW. Loyalists will scream and froth in their mouths

Last year, in this post FWD vs RWD, we said that BMW would eventually rethink their RWD only philosophy and look into FWD premium cars (aside from MINI). Couple of days back BMW confirms that it will be building a sub-1 series model with FWD components shared with the MINI. I always never understood why some people choose to equate premium with RWD.


Looks like Audi's upcoming front wheel drive A1 model has ruffled some feathers at Munich. The A1 was premiered recently in Geneva, with star Justin Timberlake present. Many who were in the recent Geneva show commented that the show stand of A1's unveiling by Justin Timberlake attracted the most crowd. I guess the spell is finally broken. Premium does not equal RWD. Justin Timberlake was recently choosen as Audi's brand ambassador. Confirming a rumour that began in Nov 2009 when Justin was spotted by paparazis in an Audi A5 as well as a Q7, which in the American Hollywood context, is really quite an unusual choice.

Mukhriz : Perodua is as Malaysian as it gets

Looks like Daihatsu's outpost in Malaysia, Perodua, is going on a PR overdrive to convince the public (and the government) that it is a truly bona fide Malaysian car company, and thus deserves every bit of protection enjoyed by Proton. Last month, Perodua proudly annonunced that the company is planning to export auto parts to DMC's plants in Japan. Yesterday, two more news hinting at the same objective again made the headlines. The first was Perodua's intention to increase the value of its local parts procurement from the current MYR 3 billion to MYR 4 billion. Next they invited Deputy Minister of International Trade and Industry Mukhriz Mahathir for a line-off ceremony of the 200,000th Viva.

The article had to even include a comment from Mukhriz,
When asked if the criticism by certain quarters that Perodua is little more than a 'rebadge company’ (ie it only puts its badge on a model that is from another company) and therefore should not enjoy privileges like Proton, the Deputy Minister said he disagreed with such a perception. He declared that Perodua models are 'as Malaysian as it gets’ because they have a very high percentage of parts which are purchased locally (up to 90% for the Alza) and the cars are definitely manufactured locally.

He noted that while Perodua’s R&D activities were different from those of Proton, he was confident that Perodua would advance in its R&D capability in coming years as it takes time to acquire the skills. Nevertheless, MITI would continue to support Perodua to help it continue to grow and establish a strong footing in the industry.

Prior to this, there have been rumours that the government intends to revoke national car privileges enjoyed by Perodua. At one time, certain factions of the motoring press have also highlighted the issue. But with Mukhriz's latest comment, Perodua can now bury any criticisms and lobbying from certain quarters to revoke trade protections / incentives currently enjoyed by Perodua.

The critics see protection given to Perodua as a very poor allocation of tax payer's money as they see it as a blatant subsidiy for the largest and richest car company in the world (Toyota Motor Co., which in turn owns Daihatsu Motor Co.) to sell its cars under a different badge at substantially lower prices against other competitors. Why does Japan and the largest car company in the world needs to be given subsidy to sell their cars here, albeit with a different face and badge? When prudent development policies would suggest that we use the resources to instead build grass root industries (i.e. parts manufacturing) and develop the necessary skill base - the combination of these two elements would create what economists call a multiplier effect that would have yielded far more benefits to the country and could even opened up doors of opportunity for other related industries, i.e. aerospace, locomotive, power generation etc etc., rather than to narrowly benefit a select few government linked organizations.

Mukhriz thinks that the company is Malaysian by virtue of its parts procurement and the minimal development work done here. Going by Mukhriz's argument, is Ford of America a Mexican company given that FoMoCo buys so many Mexican parts and even imports cars made from Mexico under the North American Free Trade Agreement? State troopers, and other Federal agents should junk their Ford Crown Vics and use the more American Toyota Camry instead. Red necks in the mid-West should stop cursing at Asians, junk their Ford F-150 and get a made in America Toyota Tundra instead, just remember to check for serious rust though or your fuel tank might decide to hop along the road. But wait, Ford could be Indian too. FoMoCo developed the Figo model solely for the Indian market, and will be built at the company's plant in Chennai, said to be the most advanced in the region. It is of course built mainly from Indian made parts. So Ford has to be Indian. On second thoughts, I think blue oval could be Australian....I remember Aussie taxi drivers swear by their Aussie made Falcons.

Is Toyota an American company? TMC argues that the company contributes so much to the American economy and makes so many vehicles in the USA that some of its models are more American than that of Ford or GM. Is Toyota also a Thai company given that the most of the world's Hilux come from Thailand, plus the Hilux Smart Cab variant is developed entirely in Thailand by Thai engineers. The engines are made in Thailand, the steel plates are stamped in Thailand. So surely Toyota is a Thai company right?

VW of China procures almost 90% of its parts in China. All their major suppliers have plants in China, with VW being their largest customer. VW sells more cars in China than it does in its home country of Germany. The VW Lavida is developed purely for Chinese drivers, and is made in China using China made parts. So surely VW is a Chinese brand and we should tell the Chinese government they can be proud of that and there is no need to develop their domestic brands and Geely can forget about buying Volvo for its technology.

OK I think readers get the drift now and you can see how ignorant are Mukhriz's comments. In the age of the Internet he still thinks everybody is stupid. The point is not just about where are the cars and parts made but where are the profits sent to at the end of the day. And Proton's profits don't get sent back to Japan.

In this interview, Perodua's new MD Aminar Rashid Salleh said "Monetary incentives aside, the business proposition makes sense for Perodua’s principal because Malaysia hosts the largest production facilities for Daihatsu Motor outside Japan, says Aminar." Of course it made sense, we are the only ones stupid enough to give them money to build cars here, while the rest of the world thinks that Daihatsu's miniboxes are rubbish. Even the Chinese consumers, and they have seen a lot of crap there, shun Daihatsu products and DMC shut down its Chinese office in 2009. Just how bad must you be to have to decide to pull out of the fastest growing and largest car market in the world when everyone else is trying to get in? The Vietnamese, and they don't get a lot of sophisticated machinery there, too are not interested in Daihatsu cars and DMC pulled out of the Vietnamese market in 2007.

Perodua's bosses have mentioned many times to the press of how proud they are of the fact that the Japanese at DMC are very surprised that the Myvi still sells so well despite being the oldest model in its product line-up. It even outsells its Japanese domestic market cousins. I find that hardly inspiring, but rather a pathetic statement coming from a company that shouts its market leadership in a market that is almost given to them on a silver platter. These sort of juara kampung mentality is what got Proton into this mess almost a decade ago when it was led by Tengku Mahalel, who proudly announed that his company is Asia's answer to BMW. Will the Myvi still be selling so well in a level playing field? And how different is the current Perodua mentality compared to the fumbling Proton a decade ago? Remember that the locally made Myvi clone, the Daihatsu Sirion, exported by Perodua only sold in tiny numbers in Indonesia. As for Perodua's own badged Myvi exported into Singapore, well the numbers are so low that hardly anyone bothers to tabulate them. Easy success fosters complacency and misplaced arrogance.

Few months ago, one of the fastest growing Chinese car maker BYD intends to make Malaysia its hub for right hand drive model assembly and export, with Berjaya Group as its local partner. But the deal won't be able to proceed until the Malaysian government grants a "manufacturing license" to BYD. But we all know that this is very likely to hit the wall. BYD's F0 model is a loose copy of the Toyota Aygo that competes directly with Perodua's offerings. It is very popular amongst Chinese youths. The Japanese at Perodua and Daihatsu, plus the folks at UMW will lobby hard to protect their interest, and competition from China is certainly not in their interest. This could be a sticky point in the coming ASEAN-China Free Trade Agreement (ACFTA). Unless Malaysia opens up its market to Chinese cars (many of which are small capacity models), the world's largest car market will remain closed to us. Is Perodua going to remain so proud of their export of autoparts to Japan, which is now behind USA, Europe and soon to be overtaken by India as well? Without access to China via ACFTA, Proton's export hopes could be affected. Perodua, on the other hand cannot export to any market without Daihatsu's approval as it does not own the intellectual property of the vehicle. So much for being a Malaysian car huh, one that cannot even be exported without seeking consent from the Japanese.

It is disappointing to know that the government, along with the general public conveniently forgets that besides Proton and Naza, the next most Malaysian car company is the Tan Chong Group, which have been manufacturing cars under the leadership of locals long before Proton or Naza came into being. Back in the 50s, the founders of Tan Chong rode around town in bicycles to sell Datsuns. But of course, Tan Chong got almost no assistance from the government, for very obvious reasons. It's a similar story with Cycle and Carriage, until it was bought over by British controlled but Hong Kong based Jardine Matheson Group.

Footnote : Perodua is 73% owned by UMW group (38%), MBM Resources Bhd (20%), Permodalan Nasional Bhd (10%), and Daihatsu (M) Sdn Bhd (5%). The remaining 27% is owned by Japanese parties — Daihatsu Motor Japan (20%) and Japanese trading house Mitsui group (7%).

Perodua itself doesn’t manufacture vehicles but it owns 49% interest in PACB, the manufacturing arm, in which Daihatsu and Mitsui control 51%. In essence, Perodua controls the domestic distribution arm while holding a minority, but still substantial, interest in vehicle manufacturing.

Vios Minor Change 2010 shots

A follow up to the 2010 Vios Minor Change post. Credits to autoincar.com for posting them up.

Launch in main ASEAN regional markets of Thailand, Malaysia, Philippines, Indonesia and Singapore is expected to be between April - June 2010.