Car Market Chronicles
French Automakers in the Brazilian Market: une Entreprise très Difficile
Citroën, Peugeot and Renault have worked in Brazil for 30 years but keep failing to prosper due to rather preventable missteps
Moving to a new country can be tough. Besides general tasks like finding work and housing, dealing with immigration bureaucracy and learning the local language(s), you have to adapt to its culture: current slang, gestures at the table, behavior when meeting people… the more effort you put into all that, the more natives will feel respected and, as a consequence, the more you will end up feeling welcome.
When we talk about companies, it is possible to say there is a slightly different path towards the same goal. They have freedom to “come as they are” because that is precisely one of their strongest sales arguments, but that hardly means they can overlook the natives’ specific needs and preferences. When the latter happens, the new company is doomed to fail even no matter which products it chooses to offer there.
The first attempts
While the French companies have been active in Argentina for many decades, their history in Brazil had a slow start. Renault, for instance, offered the 4 CV in the 1950s but saw it get crushed by the Volkswagen Beetle mostly because of a technical issue: the 4 CV’s water-cooled engine was prone to overheating and leaving the driver stranded especially on the highway, whereas the rival had always been air-cooled.
The following chapter would only be written three decades later. The actions towards establishing the Mercosul gave French companies a new opportunity because they all have factories in other South-American countries. However, the initial negotiation allowed very limited quotas of cars to divide among all makers. The necessary investment to set Brazilian branches would be too big for the sales potential they had.
The real opportunity
To be fair, French makers had not been given proper conditions to thrive there so far. That would change in a few years, when imports were made legal again after being banned in the military dictatorship era. At first, taxes dropped and everyone wanted to buy foreign cars, whether personally or using specialized companies, and automakers from all around the world dropped whatever they were doing to participate in that.
Citroën, Peugeot and Renault offered models of almost every market segment regardless of their origin. Brazilian streets quickly started to show Xantia, XM, 306, 405, 19 and Laguna, among many others. While things had a great start, with drivers complimenting them on their style, equipment and performance, they took such a sharp turn that built a bad reputation which exists up to the present. How could that happen?
Poor planning has consequences
It can be said that the initial mistake was to import several different models at once. They need specific strategies for marketing and part supply regardless of how much they sell, so the makers ended having to establish a large operation long before reaching enough sales volumes to support it. The Brazilian market had become so competitive that even the traditional automakers had trouble to keep their market shares.
Later, some regional problems appeared as well. Brazilian roads are usually in worse conditions than the European ones and the local weather is hotter than in Europe and most of South America. As a result, the French cars of that time turned out to have more problems than usual regarding mechanical resistance to everyday use and air conditioning and engine cooling capacity. Such issues were the beginning of the end.
Local production comes to the rescue
In a matter of a couple years, French cars started to bring more problems than usual and, when owners looked for technical assistance, the authorized repair shops often had stock problems. Over the years, the country underwent some economic problems that led to strong price fluctuations which made cars and parts excessively expensive. The French trio was quickly deemed unreliable by current and potential buyers.
Since most of those problems came from having to import cars, the companies decided to try and turn things over by building factories in Brazil. Citroën and Renault took part in the minivan frenzy with the Xsara Picasso and the Scénic while Peugeot entered the compact segment with the 206. That option forced them to focus on fewer models at a time in order to ensure they could provide proper service to all of them.
Poor timing has consequences
While that change of strategy gave Brazilians the sense of commitment French makers so desperately needed, it also limited the scope of their future actions. Every decision became more complex than before and they had to prepare for that. They did that quite well at first, like when Renault brought the 1998 Clio aligned with the European model or when Peugeot dropped the 206’s 1.0-liter to make it more competitive.
Sadly, that situation did not last. Some cars lasted excessively long in the same generation, such as the Clio; others received facelifts of questionable taste like the local 207; and others took too long to appear in the first place, such as the second C3. Many mistakes like those happening in so little time ended making those automakers lose credibility in Brazil once again despite trying so hard to correct the previous mistakes.
Local design comes to the rescue
Renault was the only one of those to actually achieve market success in Brazil but, ironically, thanks to non-French cars: the Logan family was derived from cars originally created for Dacia. Citroën and Peugeot, on the other hand, did moderately well with some cars but not to the same point. Nevertheless, their situation was still undesirable because none of them has ever had a car which performed truly well in Brazil.
Lately, they are taking each one a different new path. Peugeot is investing in a few cars aligned with the French ones, such as the 208; Citroën is developing a regional platform to underpin entirely new models; and Renault is working on sort of an intermediate solution of its own. They all have huge plans for the South-American countries over the next few years, although there are scarce official details released so far.
Taking chances has consequences
Because we have always learned that actions have consequences, we are often unable to understand how big they are. This history is pretty much a practical example of all that: those automakers had a bad start, it is true, but they have also made a succession of subpar decisions which ended up affecting people’s impressions. When it comes to company image, bad effects are much easier to cause than good ones.
On the other hand, nothing about that has to be permanent. Renault managed to rebuild itself in the country thanks to a complex change of strategies and all the necessary plans to execute it. When it comes to Citroën and Peugeot, there is a chance that the Stellantis era will encourage them to do something similar in the near future, especially considering that they can work together with all the Fiat and Chrysler brands.
Strong competition, government regulations, hurried decisions, occasionally poor planning… it seems that everything got in the way to prevent the French automakers from prospering in the Brazilian market. Now that they are trying new strategies, do you think they will finally achieve the desired result? Or do you believe they have to do something else differently? Feel free to share your thoughts and opinions below!
