Date:03-03 17:07 Source：autochina.comnews.cn Authour：He Lun
—— Auto Market Hotspots Q&A (120)
DS, the French luxury car brand, launched a new model – the DS7 - in Paris on February 28th. This is the first model of its second-generation products since it returned to the market 6 years ago. However, in the past few years DS has been facing huge pressure from its falling sales in the global market, and in China, a brand that used to be ambitious has also been struggling on the fringes of the market. Will this belated second-generation strategic model herald a change in fortune for DS?
Q: What’s your impression of the DS7?
A: First of all, its external design is concise, smooth, and elegant, and more importantly, it shows a unique character. As a critical person, I find only one drawback in its appearance – the door handles look a little old-fashioned, and they don’t quite fit the overall style of the car. Secondly, its interior design, materials and workmanship are also impressive – very elegant, comfortable and good-looking. Thirdly, this car integrates a lot of advanced PSA technologies. So in terms of technical specifications, it outperforms most of its competitors in the current market. It’s clear to see that DS has really worked hard on this model and wagered heavily on it.
Q: Who are the DS7’s competitors? Opinions also vary on the positioning of this model. Some say it’s a midsize SUV and others call it a compact.
A: According to DS, the DS7 is aiming to compete with a wide range of vehicle models, which are all luxury-brand cars, of course. This rival group includes the Range Rover Aurora and the Lexus NX, which are regarded as midsize B-class SUVs in China, and also the Audi Q3, the BMW X1 and the Mercedes-Benz GLA, which are A-class SUVs (compact). They come in a range of starting prices from RMB 230,000 to 390,000 Yuan. The body size of the DS7 is 4570/1891/1625mm, with a wheelbase of 2740mm, which is 80mm longer than the Aurora and the NX. So judged by the overall size it should fall somewhere between a B-class SUV and an A-class SUV and perhaps a little closer to the B-class SUV. In my view, it should be an A+-class SUV.
Q: Will this model be a hot seller?
A: Purely assessing the product, this model is really outstanding, especially in this “appearance-oriented” era; brand strength is where its problems lie. So in order to be a hot seller, it has to find a balance between product strength and brand strength; in other words, it has to sell at the right price. This is really hard, because DS not only has to consider the DS7’s competitors, but also needs to ensure it won’t affect the sales of the DS6. After all, it is not an upgraded DS6 model, and the DS6 is still on the market.
Q: If the DS7 sells well, will it help DS emerge from the doldrums in China?
A: The situation for DS in China is quite different from what it has gone through in Europe. In Europe, DS was once a widely known brand. It was a legend and a classic, so what the carmaker needs to do now is revive the brand. However, in China, people know nothing about DS. As a result, what the carmaker needs to do is build a whole new brand, which is a lot more difficult than in Europe.
Unfortunately, when it first came to China, instead of working on brand building and selling imported cars to improve its brand awareness and reputation, DS immediately started local production and a blind pursuit of sales volume (claiming to sell 200,000 vehicles in its third year). Consequently, haste makes waste – inadequate preparation leads to weak brand strength, and that results in sluggish sales growth. This situation is not something you can turn around with the success of just one model (see the articles “DS Trying to Make a Great Leap Forward? Take it Easy Please” and “Seeking Quick Success – DS’s Original Sin in China” ).
Of course things will go much better if the DS7 is a flagship model that concentrates the brand’s unique qualities and connotations. It needs to win over some famous high-end users, because only this kind of user can increase the influence of the luxury brand. They are telling people “As a DS owner, I represent this group of people, who are innovative and art-loving and have good taste.” In this way, DS models will have a “soul” and more people will start to recognize this “soul” and accept its value. In the end, people who can afford them will start to buy these cars.
Q: DS used to have the French movie star Sophie Marceau as its brand endorser. Why didn’t this work?
A: Sophie Marceau is not as popular as she used to be. A lot of people even call her “Aunt Sophie”. Clearly, she no longer has that much influence in China.
In terms of brand building and local image promotion, at first, DS was famed for its “artistic style”. But later, due to sluggish sales, DS had no money to promote the brand, and what remained was gradually forgotten by the public - just like a washed out star. Now, suppose someone takes a fancy to a DS model and intends to buy it. When he asks around - “What kind of people are buying this car?” - my bet is that others will be at a loss to answer. If a customer doesn’t even know which group of drivers are using it, how much will he want to buy such an expensive car? Unless he is someone who is too self-possessed to care about what others think of him.
Q: Borgward is also a revived brand. It didn’t do much marketing, but so far it has been successful. Why are things different for DS?
A: Borgward is a German luxury brand, but it was revived in China. Its first model is a localized car, priced at the same level as other mid-range foreign-brand models that are produced in China. In this price range, a lot of users give priority to the price-performance ratio, and in terms of brand, simply being German will suffice (see the article Opportunities for Latecomers in the Auto Market).
However, DS is positioned as a luxury brand, and its cars carry high prices. If people want to buy a luxury car, they will consider cost and performance, of course, but more importantly, they will be looking for added value from the brand – in other words, the user will want to feel proud of owning this car, just as someone will feel proud of working for Google even if it’s only as a receptionist. But the process of creating this luxury brand image and making users proud to be part of it is really time consuming and financially demanding, especially in China.
Q: So what exactly do you think DS should do to turn things around in China?
A: First, there is no shortcut to successful brand building. DS must take it slow and prepare itself for a lengthy process. It should never attempt to make a ‘great leap forward’ again. A luxury brand needs stories. A young brand may have to accumulate these stories, but DS already has plenty of ready-made tales to tell. Why not present these to the users so that they can share them with others, as well as talking about the cost and the performance of the car? Over time, these stories will build a strong image for the brand and attract those potential customers who recognize the ideas, values and connotations of the DS brand.
Along with this, DS also has to rebuild a user image. After the launch event of the DS7, I asked Mr. Yves Bonnefont, CEO of DS, about the characteristics of DS users in France. He replied that DS users were concentrated among high-level intellectuals and white collar workers and that they all love the arts. I find this kind of user image matches the DS brand features quite well, and it should also be the user image for DS in China.
I believe that in this Internet era, there are lots of low-cost and efficient marketing methods DS can utilize to sell its stories and build a good user image.
Q: But with a production capacity of 200,000 vehicles per year, DS is suffering heavy losses, and it really needs first to overcome this problem. Now you say brand building is a long process, so how is the manufacturer going to solve the problem?
A: DS has been listed in China for 3 years. During this period, the sales director has changed three times, but the sales have gone from bad to worse. This indicates that the essential problem does not lie in marketing. DS aimed too high and imposed too much pressure on the management, and consequently, the management chased sales blindly, in pursuit of quick success. This is the result of a flawed strategy. The pressure from production capacity should not be put on the current DS brand or the DS management; instead, the two shareholders should look for other ways to solve it. If DS wants to turn things around, the shareholders must adjust the strategy and be prepared for the fact that they won’t make a profit in the next 5 years. They should give the management some time to allocate resources and allow them to make mid- and long-term plans for brand building in accordance with the commercial rules and the special national conditions in China. In other words, DS is at a stage where it has no expectations and nothing to lose in China. In order to get back on its feet it has to make one last stand. The good news is that DS is coming with its brand new products – a succession of 6 second-generation DS models including the DS7 have been or will be launched over the next few years, and this will provide strong support to DS in its brand rebuilding.
Both Mr. Yves Bonnefont and Mr. Arnaud Ribault, Vice president of DS Brand, Global Sales and Marketing, have said the same thing to Chinese media – it takes at least 15 years and up to 30 years to build a luxury brand. DS still has a long way to go.