COSTS
Do everything possible to drive down running costs
CARS CAN BE such a wonderfully irrational purchase: that’s why Alfa Romeo, Mini and Maserati still exist. But even the most romantic petrolhead doesn’t want to pay over the odds for a car, so Peugeot is obsessing about the new 508’s cost of ownership. And the make-or-break figure is how much hard-earned a 508 is worth after three years, known drily in the trade as its residual value (RV).
The more sought-after a car, the higher its RV will be: a decent percentage return on a high-mileage saloon will be in the mid-30s. The outgoing 508’s RV
‘is in the low 20s,’ laments David Peel,
Peugeot UK’s managing director. And it’s not due to oversupply: ‘We registered less than 500 last year. The way we managed that car killed it. On a monthly basis, it’s too expensive.’
And that’s the nub of it: because a customer has to fund a car’s depreciation over a lease, a model whose value drops like Sunderland through the football leagues is cost-prohibitive.
So Peel has taken steps to shore up Peugeot’s RVs, since he took over two-and-a-half years ago. On the banned list: forcing cars into daily rental fleets and incentivising dealers on sales volume – that only increases the temptation to pre-register stock, and their secondhand stigma hits their value. The MD has even changed the approach to dealer demonstrators, supplying them on contract hire and taking them back if dealers aren’t prepared to sell them at the appropriate residual value. Solid in theory, but his predecessors made similar promises, all empty. Peel hits back with the example of the 3008, the first car he launched. Industry RV-setters CAP initially forecast Peugeot’s SUV would hold 44 per cent of its value after three years. Subsequently they hiked the RV by 10 points, thanks to the car’s used appeal and Peel’s policies.
And the 508? A diesel’s projected RV after three years and with 60,000 miles on the clock is 36.3 per cent, not far off an Audi A5 Sportback’s and better than the premium German saloons. It’s an RV that can fund a £299 per month PCP rate over four years for retail customers. Other costs are competitive too: Peugeot expects a £52-a-month service and maintenance bill, just a quid off the best-in-class Vauxhall Insignia. Plus the car’s low CO2 figures minimise tax rates for company car drivers. It all adds up to make Peel confident of selling 4500 fastback and SW 508s in a full year.