We sit down with PSA’s North American CEO, Larry Dominique
Earlier this month, France’s PSA Group officially launched its mobility service Free2Move in the U.S. market. Instead of offering its own version of Lyft or Zipcar, PSA created Free2Move as an aggregation app, partnering with service providers that already exist and allowing users to pick whichever one best suits their needs at the moment.
But PSA isn’t interested in simply getting Americans hooked on a mobility aggregation app. It sees Free2Move as a way to eventually bring its cars back Stateside. It’s a daring plan, especially considering how difficult it’s been for Fiat to gain traction in the U.S. again. To get a better idea of what PSA’s plans are, we sat down with its North American CEO, Larry Dominique, at the U.S. launch event for Free2Move.
Larry Dominique, president and CEO of PSA North America
Perhaps the biggest question I had was why he thought people would use Free2Move to access the services they already had on their phone. Dominique sees it about being an easier comparison between services. “If you have one app, you can see all the choices you have to get from point A to point B,” he says. “So the opportunity is to provide in one application a myriad of solutions that help you however you need to deploy transportation.
“Within a year or so, you’ll be able to take the Free2Move app, hit the voice button, and say, ‘I want to get from where I am right now to X,’ and Free2Move will offer you the solutions. It might take seven minutes if you take a bike, three minutes if you use a ride-hailing service, or if you want to hop in a Car2Go, you can do that as well. The idea is to offer you the best solution for what you’re trying to do and give you choices.”
Currently, though, U.S. options are relatively limited. It works with Car2Go, Zipcar, and a few bike-share services, but Uber and Lyft, the most popular ride-hailing services here in the States, have yet to sign on. But if PSA is eventually able to get more providers on board like it has in Europe (and at the moment, that’s a huge “if”), the app sounds like it could be remarkably useful, partly because you won’t have to open multiple apps to compare pricing or availability.
“In the solutions we offer you, you could ask it to [sort options by] price or time,” Dominique says. “Because it depends on what’s important to you. Sometimes time is more important to you than money. Other times money is more important than time.”
So if, say, taking one ride-hailing service home from the bar costs significantly than another, it sounds like you could theoretically take advantage of that within the Free2Move app. Dominique says he’s also working to simplify the way you sign up for new services.
“One of the things we’re working on with the providers, and this should roll out in the next couple months, is to allow us to be a single sign-on/login relationship,” he says. “So you could go to the Free2Move app, register who you are, your driver’s license, your credit card information, etc., and you can start to pick which partners you want to engage with. Our goal is to make it as simple as possible.”
Of course, PSA didn’t create Free2Move simply to help people compare other companies’ services. That’s certainly one part of it, especially because PSA’s agreements allow it to take a cut of the profits once it refers enough trips to each provider. But it’s also about building a relationship and gathering data.
“Free2Move allows us to establish an understanding of how U.S. consumers are changing their desires for car ownership, car usage, and mobility consumption,” Dominique says. “The way I think of it today is 17 percent of the U.S. industry today is fleet, 83 percent is retail. Let’s fast forward 15 years from now. It might be 17 percent fleet, 15 percent mobility, and 68 percent retail sales. Retail sales is never going to go away, and there are going to be markets where we sell cars to consumers who just want a Peugeot or a Citroen or a DS. But there are going to be markets where people say I don’t really need a car anymore. Or I only need a car on the weekends. Or I want to rent by the hour or the minute during the week, but I need a car for the whole weekend. We want to be the provider who provides the solution for any combination of services you need.”
But Dominique says he doesn’t see the app ever getting to the point where the only cars it offers are PSA products.
“I get asked all the time, ‘Oh, so you’re going to establish all these mobility operations, but the moment you bring Peugeot, Citroen, or DS here, you’re going to throw all your cars in?’ And the answer is ‘No.’ Because if somebody wants a full-size pickup truck, I don’t have one. But I want to make sure you’re satisfied, so I’m going to buy a Ford, a Chevy, or maybe a GMC or a Dodge,” he says. “Our goal is to promote our products, our brands, and our service, but at the same time, we know we’re going to be multibranded in the future, and that’s the way you’re going to satisfy customers.”
In time, though, he does see PSA creating its own versions of services like Lyft and Zipcar. But even those won’t exclusively offer PSA products.
“We are going to be launching our own physical mobility services over the next couple years,” he says. “We’re looking at ride-sharing, ride-hailing, micro transit, and subscription-based models. So you’re going to see us operating businesses ourselves. We talk about our three-phase approach: mobility, mobility with our cars, and then our cars themselves. So as we talk about phase two, putting our cars in mobility services, we’ll certainly put some in ZipCar if they want some. And we’ll put some in our own car-sharing program. For example, we may end up making 30 percent our own vehicles. But the other 70 percent will be whatever vehicles it takes to make a successful car-sharing company.”
Speaking of those cars, he says the next generation of PSA products will be designed to meet U.S. regulations, and he’s already decided which brand to introduce first. When asked which one that is, though, Dominique wouldn’t say. “I’d have to be on my deathbed [to tell you],” he says. He did, however, give me a few details on what type of cars he’ll bring over.
“This country revolves around two segments: C and D. Specifically C-hatch, C-sedan, D-hatch, D-Sedan, and D-SUV,” he says. “And full-size pickup trucks. But the great news is, PSA’s EMP platform, which is our global C and D platform, is being homologated for North American markets. So I have all of those segments to choose from. With the brand that we’ve chosen, I have products in every one of those categories that we’re going to eventually bring to the U.S. We’ll launch with a couple of those segments and then very quickly follow with the rest of the vehicles.”
Those also happen to be some of the most competitive segments in the United States. The C-segment is what we call compacts such as the Toyota Corolla and Honda Civic. The D-segment is midsizers such as the Camry and Accord. Those are the same segments Fiat Chrysler recently gave up on when it canceled the Dodge Dart and Chrysler 200. So why does Dominique think PSA can break into those segments?
“The first level of that is that we’re French,” he says. “We’ve reviewed all of our brands with American consumers, and the great news is that the positive association with being French is very strong. It’s about design. It’s about innovation. It’s about emotion. A lot of people associate French brands is with luxury. I’m not saying we’re positioning a luxury brand, but people recognize that all of our brands are distinct.”
Dominique also thinks that, unlike some of FCA’s recently introduced brands, PSA has the advantage of being able to offer the types of cars that already sell well here.
“Let’s talk about Fiat for a second,” he says. “What segment do they compete in? B-segment, which is a disaster in the U.S. Alfa? The jury’s out on whether Alfa will be successful.”
From the sound of it, he wants to do things differently with the dealerships, too.
“I have the opportunity to think about a customer journey in a completely new way,” he says. “How digital can I make it? How integrated with what the customer wants to do on their smartphone can I make it? Do I need full-size dealerships? Do I need to service it at the dealership, or can I service it at their house? Can I have separate service facilities that service the vehicles? It’s about convenience. It’s about making the system and a process that’s as comfortable for the customer as possible. And we all know that dealers get a bad rap. The dealer franchise system is what it is.”
But does that mean PSA plans to buck the dealer system altogether and try to establish direct sales? Not necessarily.
“Tesla’s bucking the trend at the cost of hundreds of millions of dollars a year in legal fees,” he says. “I don’t look anything like Elon Musk. I don’t have as many zeros on my bank statement as Elon Musk. Tesla’s unique. Tesla’s different, and they can be different. But we want to be a high-volume brand eventually.”
Still, it sounds like Dominique might try something like the program Hyundai recently announced, perhaps even experimenting with a fixed-price model.
“When I was at TrueCar, I learned that price transparency matters to consumers,” he says. “Different OEMs have different approaches on price transparency. My point of view is that the more consumers know about what a brand is worth, the better it is for the brand and the easier it is for the dealer to sell the car. When I was running Automotive Lease Guide, I had a lot of OEM executives tell me ‘If I could just keep my own dealers from eating each other’s lunch, we’d be able to sell cars at $500 or $1,000 more a car. But my dealers eat each other every day and don’t pay attention to competitors.’”
And that goal of doing things differently is apparently a directive from the global head of PSA himself.
“Carlos Tavares has been very clear with us,” Dominique says. “Understand the market. Develop the market. Develop the products that are going to fit right in the marketplace. Launch when you’re ready. Develop the right distribution strategy that doesn’t have the distribution cost that exists in the U.S. today. Make it more efficient for the consumer and for us.”
But before Dominique gets to the point where he can build out his dealer network, he needs to make sure Free2Move actually takes off in the States. And in that regard, he has some lofty goals.
“Our objective is to become the dominant mobility provider in North America,” he says. “Globally, actually. Our goal would be that no matter what kind of mobility you need, we are the brand you think of to provide that.”