Peugeot Unveils Citroen C4 Cactus in Positioning Shift

PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, introduced an urban crossover model as part of a move by the Citroen brand to serve customers seeking cheaper vehicles than its current lineup.

The Citroen C4 Cactus, set to go on sale in June, was unveiled at a presentation last night in the Paris suburb of Le Bourget. The model, which combines attributes of a car and a sport-utility vehicle, will be built at the company’s Madrid plant, and is the main new product Citroen will present at the Geneva Motor Show next month. It’s based on the same chassis as the Peugeot marque’s 208 hatchback and 2008 crossover.

Departing Chief Executive Officer Philippe Varin outlined a strategy last year for a deeper differentiation between the Peugeot and Citroen brands as part the Paris-based manufacturer’s efforts to return to profit. The company is struggling to stem losses after a six-year slide in Europe’s automotive market to a two-decade low. The Peugeot nameplate will be the focus of the company’s up-market model range, though Varin said Citroen won’t become a low-cost division.

“It’s an interesting idea, which reminds me what the Koreans used to offer before they decided to go more along the route” of Volkswagen AG (VOW) with upgraded models, Erich Hauser, a London-based analyst at International Strategy & Investment Group, said by phone. Citroen is being repositioned “like a half-budget brand.”

Photographer: Pierre Andrieu/AFP via Getty Images

The PSA Peugeot Citroen C4 Cactus is unveiled for the first time at the Parc des Expositions Paris Le Bourget, outside of Paris, on February 5, 2014. Close

The PSA Peugeot Citroen C4 Cactus is unveiled for the first time at the Parc des... Read More

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Photographer: Pierre Andrieu/AFP via Getty Images

The PSA Peugeot Citroen C4 Cactus is unveiled for the first time at the Parc des Expositions Paris Le Bourget, outside of Paris, on February 5, 2014.

Model Pricing

The company hasn’t disclosed the price of the C4 Cactus. The cheapest Citroen model in Germany is the C1 subcompact, which sells for 9,550 euros ($12,900), including value-added tax, according to Auto News magazine’s current new-car catalog. Peugeot’s lowest-price vehicle is the 107, also a subcompact, at 9,750 euros, while the 2008 starts at 14,700 euros.

Peugeot reported a 510 million-euro first-half operating loss at the group’s automotive unit. The company’s reorganization includes shutting a car plant near Paris, reducing its French workforce by 17 percent by the end of 2014 and expanding sales outside Europe as its home market offers few prospects for economic growth. The company is also looking at selling as much as 3 billion euros of shares, with Chinese partner Dongfeng Motor Corp. (489) and the French state potentially buying stakes, Peugeot said on Jan. 20.

The C4 Cactus will be equipped with wide, sofa-like front seats, front passenger air bags in the roof and controls on a touch screen, the company said. The cost of operating the vehicle will be 20 percent less than for competing models in the segment, Citroen said.

Photographer: Pierre Andrieu/AFP via Getty Images

Chief Executive Officer of the Citroen Brand Frederic Banzet poses with the new Citroen C4 Cactus as it is unveiled at the Parc des Expositions Paris Le Bourget, outside of Paris, on February 5, 2014. Close

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Photographer: Pierre Andrieu/AFP via Getty Images

Chief Executive Officer of the Citroen Brand Frederic Banzet poses with the new Citroen C4 Cactus as it is unveiled at the Parc des Expositions Paris Le Bourget, outside of Paris, on February 5, 2014.

Optimized Budget

“That car is a clear manifesto of the future positioning of our Citroen range, with the same characteristics, more design, more useful technology and an optimized budget,” Frederic Banzet, who runs the brand, said in an interview with Bloomberg Television. “You can say it’s a smart buy.”

Peugeot’s sales in Europe fell 8.5 percent in 2013 to 1.34 million vehicles, narrowing the group market share to 10.9 percent from 11.7 percent in 2012, according to the Brussels-based European Automobile Manufacturers’ Association. That compares with growth at VW, Europe’s biggest carmaker and the second-largest worldwide, to 25.1 percent of the region’s auto deliveries from 24.8 percent.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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