French automaker to open North American HQ in Atlanta

Jan 23, 2018

The Atlanta area claimed another headquarters for a foreign automaker on Tuesday when the French parent company of Peugeot and Citroën announced it will locate its North American base of operations in the region.

Groupe PSA will join Germany’s Mercedes-Benz USA and Porsche Cars North America among the major European brands to call the Atlanta area home. But unlike the German rivals, PSA currently does not sell any of its automotive brands in the U.S., and it is likely to be a few years before that happens.

In PSA, Atlanta gains another international brand at a time it is seeking other major headquarters, including Amazon’s second operations hub.

Georgia landed the Kia Motors factory in West Point last decade, and more than 27,800 Georgians work in the automotive industry, according to the state Department of Economic development.

In the past few decades, automotive manufacturing has shifted south. Though Georgia has only one major vehicle manufacturing plant, the state is home to a number of parts suppliers that serve a network of auto plants throughout the Southeast, including BMW, Hyundai, Nissan and Volkswagen.

Atlanta will be the beachhead for PSA’s North American return. PSA CEO Carlos Tavares announced plans in 2016 to resume sales in North America, and PSA North America President Larry Dominique said the company must be a player in the world’s second-largest auto market.

PSA did not name a permanent location in Atlanta, nor did it say how many employees will eventually be hired at the new headquarters. PSA will occupy temporary offices in a WeWork co-working location on Peachtree Street in Midtown.

Dominique said the company wants to be within the city limits, and the headquarters will hold the full assortment of corporate jobs, including sales, marketing, IT, service, legal and software development.

PSA’s brands also include DS and former General Motors nameplates Opel and Vauxhall, which the company acquired last year. The company sold 3.6 million vehicles in 2017, with Europe accounting for about two-thirds of all sales.

Among PSA’s brands, Peugeot last sold vehicles in America in 1991.

A Citroen autonomous vehicle is put through its paces in testing. Source: Groupe PSA Photo: The Atlanta Journal-Constitution

Car culture’

PSA’s first product to launch in the U.S. is its Free2Move app, a mobility app that connects users to every car-sharing service — such as Zipcar — in a given city. The first hires for PSA’s new headquarters will likely be for sales and technology jobs related to that service, Dominque said.

Matt DeLorenzo, managing editor for news at automotive trade publication Kelley Blue Book, said U.S. customers might be re-acquainted with PSA’s brands first through the Free2Move app. PSA could use ride-sharing and so-called vehicle subscription services as low-cost ways of entering the U.S. market.

PSA picked Atlanta after a year-long search because of its globally connected airport, its nucleus of technology talent and the city’s “car culture,” Dominique said.

“We chose Atlanta because it has a great mix of modern tech software development and people who love cars,” he said. “We are a tech company more and more, but at the end of the day we are still a car company that makes cars people want to drive.”

But PSA has a substantial challenge ahead of it to crack into the North American market. More than three dozen brands are sold in the U.S., and virtually all have expansive and costly networks of franchised dealers and service centers, and many manufacture at least some of their models in North America. For now, PSA has no plans to manufacture vehicles in North America.

“We have no legacy, we have no infrastructure, we have no existing IT, we have no existing dealerships,” Dominique said in an interview with The Atlanta Journal-Constitution on Tuesday. “We have an opportunity to look at new technology, and the way people want to buy cars and do things in a leaner way.”

Dominque said the company is still examining how it will sell its products in North America. A Tesla model of direct sales comes with substantial costs, and many states have laws requiring vehicles be sold via franchised dealers. It also takes time and money to build dealer franchises.

Dominique, a former Nissan and TrueCar executive, said his company’s model will rely heavily on new digital tools and products.

He said a hybrid model of direct sales and dealers could be one path.

“It could be a very different dealer model than you are used to seeing,” he said.

PSA has not named which of its brands will be its first to return to North America. Peugeot and Citroën would hold nostalgia for some buyers, and the luxury Citroën or DS nameplates would come with higher profit margins, said DeLorenzo, the Kelley Blue Book editor.

Kelley Blue Book, like the AJC, is owned by Atlanta-based Cox Enterprises.

“PSA is not going to be a big player,” he said. “They’re not coming in to be a big disrupter. They are here to play in the luxury and near-luxury arenas. They have some models that are clearly different.”

Dominque said a decision on which brands will first appear in the U.S. is still a year or more away.

PSA’s entry into North America comes at an interesting time. Vehicle ownership is changing in the U.S., and automakers are rebranding themselves as providers of “mobility” products rather than carmakers.

Automakers are rethinking sales and leases as well. So-called subscription models, where customers essentially lease a vehicle per month in a program that includes the vehicle, insurance, maintenance and other perks. Unlike a lease, the subscription services tend to be shorter, and clients can change models frequently.

Porsche launched its subscription model in Atlanta last year. Porsche Passport is an app-based subscription program that provides on-demand access to Porsche’s fleet of luxury-sports models.

Industry officials also are rethinking the car, including investing heavily in autonomous vehicles.

U.S. auto sales totaled about 17.2 million in 2017, a slight decline from the year before and the first time full-year sales declined since 2009, according to CNN. Average vehicle prices have climbed, however, as more Americans buy pricier SUVs, crossovers and trucks.

Gov. Nathan Deal said he quietly visited the PSA’s headquarters in France on his last economic development mission last year, but that he couldn’t talk about it until he returned.

“For this French-based company to decide that this where they want to re-enter the American market, to decide that right here in Georgia is where they want their North American headquarters to be located, that is a great affirmation for what our entire state is doing,” Deal told the AJC.

Staff writer Greg Bluestein contributed to this report.