Next-Gen Peugeot 208: An Electric Game Changer For France?

Peugeot (OTCPK:PEUGF) has officially introduced the new 208 or 208 II to the world of hatchbacks at the Geneva Car Show 2019. The car will be available to customers later this year in June. It could be a game changer not only for the world of hatchbacks, but also for the car manufacturer, as it could reverse the trend of declining 208 sales. But why is that?

Ever since it was introduced, the 2-series is a highly successful, high-volume series for the car manufacturer. Since the inception of the famous 206 in 1998, it sold roughly 10 million times, whereas its predecessor, the legendary 205, sold 5.2 million times. However, sales figures for the 207 were disappointing with just roughly 2.2 million units sold, and even the first-gen 208 does not come even close to the sales figures of the well-known 206. So why should investors be optimistic about the 208 II?

Peugeot announced that it will offer the 208 II not only as a gasoline or diesel version, but also as a fully electric vehicle for a price not yet specified. The e-208 will offer its drivers a range of 340 km (WLTP), which is far more generous than the range of the so far biggest selling EV-hatchback in Europe: the Renault Zoe (OTCPK:RNLSY). In fact, the Zoe is not only the biggest selling EV-hatchback in Europe, but also it’s the most successful EV in any class so far (as of 03/29/19). One of the reasons for that is its modest price of roughly 22,000 euros, and its modest size that makes it easy to navigate and park on the narrow and crowded streets that are so common in European cities. Yet its range of just 300km (WLTP) gives the new e-208 a certain edge over the Zoe with an additional 40km. And given that the 208 II is a city car just like its rival, a range of 340km should do for an entire week of short-haul, inner-city commuting.

And there is another reason that very likely makes the e-208 so much more appealing. Whereas sales of the Zoe are impressive for an EV – it sold 14,614 in 2016, 31,932 in 2017 and 39,469 in 2018 – the Zoe cannot build on the popularity and reputation of the 2-series. Because of the modest price, the non-EV 2-series seems to be especially popular among younger drivers. The 205 was well known for the successes of its rally version, the 206 was featured in the European versions of the then popular video games Need For Speed Underground and Need For Speed Underground 2, and the current 208 is featured on Gran Turismo Sport.

Furthermore, the more aggressive style of the 208 II compared to the Zoe (the front features a wide black grill and the rear features narrow lights that give it a style similar to the new Porsche Macan (OTCPK:POAHF)) make it seem more appealing to the eyes of future customers than the rather cute and curvy front and rear styling of the Zoe with its soft lines.

And with this subjective advantage of design over the Zoe, the 208 could alter the perception of current EVs: That they are either expensive like a Tesla (NASDAQ:TSLA) or a Jaguar I-Pace or not really easy to the eye like the Zoe. I do, of course, acknowledge that this is a highly subjective point, but then again what makes you decide what car to buy? Facts and numbers, or sheer psychology?

However, if we look at the sales figures of 2018 and 2017, it seems reasonable to only be partially optimistic. Why is that? On the upside, the 208 I is the biggest selling car in Peugeot’s fleet, selling more than its SUVs 2008, 3008, 4008 or 5008. The manufacturer sold more 208 both in 2017 and in 2018 than 308 and 408 combined! Yet on the downside, the manufacturer sold 9.8% less first-gen 208 than in 2017, while sales of its bigger SUVs 3008 and 5008 rose by 17.1% and 27% respectively. Overall sales (including the commercial fleet) declined by 17.9% compared to 2017. If the 208 II will be a true game changer or just another continuation of the 2-series’ slow decline remains to be seen – and it will be seen starting this June.

So what’s the agenda for the prudent investor this fall? Everyone who considers investing in Peugeot should watch the 208 II sales very closely this fall. If the manufacturer manages to reverse the trend of declining sales of the 2-series, it could significantly boost the company’s overall earnings as the series still remains Peugeot’s top seller. That the macro-trend of the market favors SUVs over hatchbacks and sedans should also be considered.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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