SMEs are key to maintaining Citroen sales as the UK market likely contracts further over the next two years.
Managing director Karl Howkins, who joined the UK operation just over 12 months ago, described the past year as the toughest year he has been through in 31 years in the industry.
He added: “We have been through tough times before and we will come through it, but whatever the outcome of Brexit I think we are due another recession, so I see a market next year closer to 2009 levels, around the 2 million mark.
“We are already seeing pressure on retail and fleet generally follows. But for us the SME market is very important, there are some 500,000 SMEs in the UK and this number is growing as entrepreneurs leave larger companies to set up their own business.
“SMEs also have employees and we see value in working on affinity deals.”
Howkins said his best case scenario sees the market contracting by 10% and up to 25% in the worst case following a no deal Brexit. He added: “So we have to focus on what we see as good business – retail and SMEs who buy cars and vans.
“We can also do well in corporate fleet and motability but on rental I would not want to go over our index which is about 7%.
“Profit is king, market share is vanity but we want to maintain our position with about 3% of the UK Market.”
Howkins said Citroen UK has been planning all year for Brexit and added: “There has already been one false dawn in March and we have been working on a number of scenarios.
“With no deal we are likely to see tariffs of 10% on models we bring in from Europe and the only people who will be paying for that is the end customer.
“Tariffs will have an affect on the final price and, correspondingly, the monthly payments for PCPs or PCH which could rise by £30-£40 a month.
“We could use finance to mitigate against higher prices with lower interest but I think the banks might start to get concerned.
“If prices have to rise, our job in that scenario is to educate our dealers and customers on what is happening and why. Ultimately the collective issue is profitability for us and our dealers – but we have to remember that the customer is king.
Certainly we want a Brexit deal but we also want an end to the uncertainty. At the moment we don’t know what’s happening after October 31.”
A fall in the market will present problems for dealers and Howkins urged his network “not to sit back and wait for customers to come through the doors.
“They need to get out talk to them. People buy from people and we are in danger of losing the ability to communicate face to face.
“We have a loyal band of dealers but some of them are still doing the same thing they were 20 years ago. They need to move on, but I do see the network reducing from 145 to 130 over the next couple of years.”
Even though there are plans to reduce dealer numbers Citroen is rolling out its La Maison programme in open points in expensive areas.
These are small outlets with few display models or staff. Howkins said these give the brand the ability to have a low cost footprint in expensive areas to help the dealer network. It’s a concept widely used across Europe.
Howkins added: “As well as loyal dealers, we also have a very loyal customer base. but we have to look for conquests as the market contracts – not easy as everyone will be looking to do the same thing.”
