HULT INTERNATIONAL

BUSINESS SCHOOL

Young
Buyers in
the Car PREPARED BY
Hult Consulting Group

Industry APPROVED BY
Claudia Loubriel
Alexander Cruz
Maximilian Kleiner
Matteo Mancini
NOVEMBER 2019 Oscar Ferraccioli
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Introduction
At Hult Consulting, the client is at the centre of
everything we do. We take great care, both
personalising and augmenting your
experience to drive value for the future.

Peugeot hired Hult Consulting to understand

the key decision influencers for young car
buyers. This report aims to offer advice to the
automotive manufacturer Peugeot, who is part
of Groupe PSA. Five consultants were working
on this report: Claudia Loubriel, Alexander
Cruz, Oscar Ferraccioli, Matteo Mancini, and
Maximilian Kleiner.

The approach by Peugeot was a direct result

of several volatile factors in the automotive
world. As technology such as autonomous
vehicles becomes more pervasive, consumers
grow weary of safety, which coincidentally, is
one of the most significant factors regarding
new car purchases today. Additionally, the
mentality of newer generations is displayed in
such a way where car ownership is viewed as
less of a necessity for daily life (Deloitte, p. 11-16,
2019).
The Electric Vehicle industry is now showing
potential for growth and mass production,
with the integration of China in the supply
chain and the European Union’s support
towards more environmentally friendly
policies. North America’s low fuel price, on the
other hand, has kept consumers at bay and
slowed down the EV industry’s progress
(Deloitte, p. 4, 2019). In this paper, we will
discuss how these and other factors should be
implemented for Peugeot’s R&D, Marketing,
and Sales departments.
Our goal was to gauge brand affinity
between Peugeot and its perceived
main competitors. Not only as a
whole, but how it relates to moving
trends within the automotive industry
(environmentalism, willingness to pay,
and changing consumer transport
dynamics), with a focus on the next
generation. We sought out to stage a
simple 10 question survey to young
car buyers to collect our findings; in
this report, we will walk through a
literature review of secondary data
findings, existing limitations, primary
data findings, and our analysis on that
primary data—with conjoint analysis
to our secondary data. Finally, we will
recommend how Peugeot can
effectively increase its market share
for the young car buyer segment.
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According to the survey conducted

Literature by Brandwatch about consumer

trends in the auto industry, the
most critical factors for customers

Review when assessing a purchase varied

quite a bit from country to country
(Consumer Trends for 2020, 2019).

Moreover, vital attributes that

customers look for in a car are
As part of their investigation,
quality, which added up to 30% of
Brandwatch focused on different
the total vote, and affordability,
countries and their decision-making
which came in second with 21% of
process, each highlighting aspects
the total vote (Consumer Trends
that influence their preferences. The
2020, 2019). Quality can mean
three main countries Peugeot can
different things, depending on the
concentrate on are France,
buyer; therefore, auto brands need
Germany, and the United Kingdom.
to dig further and examine which
When asked “What might affect
aspects (security, aesthetics,
your decision to buy from a brand?”
reliability) are most likely to impact
options like sustainability, past
their target audience. Brands must
experiences, online reviews, and
perform due diligence to ensure
influencers were given as options. In
that the product they are
France, consumers are likely to buy
producing meets the quality
a more sustainable car, and they
standards in the regions and
would probably be influenced by
communities targeted.
how the senior staff portray their
products, while customers in
Germany are focused on past
experiences from family, friends,
and colleagues. Lastly, the United
Kingdom’s respondents were
proportional in every factor,
indicating that there is no single
preference used (Consumer Trends
2020, 2019).
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Limitations
The survey provided useful information for the
research in question. However, both our results
and process created some limitations. 

Firstly, 27 out of the 43 answers were from Italian

nationals. This limited us regarding the location
question of the respondents, which made up
almost 63% of the overall responses. As a result,
our conclusion will be mainly based on the
tastes and preferences of southern Europe.

Secondly, the number of respondents varied

throughout the survey, and some questions
were skipped, causing the survey to become
incomplete. That being said, the data collected
might show some minor deviations in regards to
a total population percentage.

Thirdly, the application used to collect the data,

SurveyMonkey, is limited to ten questions per
survey in the free version. A paid version of the
program would have been required to have the
possibility to ask additional questions or to use
other functions.

Lastly, we are staying mindful of potential

language barriers that would arise from reading
the survey. For example, if a respondent had
trouble understanding the exact meaning of a
question, the answer could turn out to be less
precise than we had initially hoped.
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To better understand consumer

preferences and habits, our team

Findings
conducted research totaling 43 responses.
This helped us to better understand
demographics, car manufacturer appeal,
and ideal car price ranges—as well as
engine type preferences.

With our first question, “What type of As shown in Figure 1, Mercedes-Benz

transport do you normally use?”, we
wanted to understand the number of
young buyers regularly using automobiles
to move around. Over 50% of our
respondents reported using cars as their
primary means of transport, whereas 27%
stated using public transport. Walking and
cycling added up for the last 15%. This may
be due to different reasons: a faster
commute, the speculation that many
abroad-university students don’t feel the
need to buy a car, or that those very same
students are aware of the relationship
between climate change and CO2
emissions.
Our consulting team wanted to get more
insight on our respondents’ gender to see
if there were any differences in
preferences between male and female:
60% of our respondents were males and
40% females. This information helped us
to better analyse ideal price ranges,
engine types, car buying options, and if
certain accessories were more appealing
based on gender.
overwhelmingly took the brand appeal,
with over 70% of respondents ranking it
#1. Volkswagen was a close second,
with over 50% of respondents
collectively ranking it #2. Peugeot finds
itself in an exciting field, an almost
perfect Gaussian curve that indicates
polarization between young car buyers:
roughly 24.3% ranking it 3rd, 19.5%
ranking it 4th, and 19.5% ranking it 5th.
Only 4.9% of survey respondents ranked
it 1st, while 12.2% of survey respondents
ranked it 2nd. It should also be noted
that 9.8% of respondents ranked
Peugeot last in relation to their top
competitors. This shows that car
manufacturers in the same price
bracket as Peugeot are more appealing
for young car buyers. 
This isn’t too far off from what was
concluded by The Daily Telegraph,
“Choice is the mantra for Peugeot, with
a 1.2 liter, three-cylinder turbo petrol
engine with three power outputs and
three transmissions; one four-cylinder,
1.5-litre turbodiesel manual likely to
appeal to just 5 per cent of UK buyers’
and an all-new battery-electric version
likely to appeal to 20 per cent” (para. 9).

Figure 1 - Brand Rankings and Distribution  According to Young Buyers

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Findings
Regarding paths of ownership, 23 of our respondents would prefer to purchase new
automobiles, 16 would prefer to buy pre-owned cars, and only five respondents would
consider leasing cars. 45% of our respondents when asked what their likely form of
financing is answered they would fully purchase the vehicle. 27% stated they would
need help from their family, 11% would ask a loan while 15% preferred not to answer.
This shows that young car buyers prefer to purchase their cars. Peugeot needs to adjust
their pricing strategy for young car buyers, focusing on giving them different options
when it comes to buying both new and used vehicles. 

Throughout our primary research, we discovered consistent preference towards hybrid

and electric vehicles. Over 50% of our respondents stated that they would prefer to
purchase a hybrid or electric car rather than a diesel or petrol engine automobiles.
Peugeot is already manufacturing both hybrid and electric vehicles, which gives them a
competitive advantage. These results also show that Generation Z and Millenials are
much more aware of the environment (CO2 emissions).

We have been able to get responses for

our primary research for young car
buyers all over the world: Italy, Albania,
Austria, France, Germany, Norway, UK,
Peru and the USA. Majority of our
respondents come from European
countries, since Peugeot’s customer
base is centred there.

To help Peugeot with its marketing

strategy, we asked our respondents
about the social media they most use:
89% of them use Instagram while only
11% use Facebook. This information will
be crucial for Peugeot to master their
social media presence and target the
right customer segment.
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Analysis
Our analysis consists of multiple price
preferences, engine preferences, accessory
preferences, and brand preferences for young
buyers, as they relate to Peugeot’s current
product mix. Figure 2 indicates the current
product mix, base price, and engine options.
Figure 2 - Current Peugeot Product Mix

Our team found that today's young car buyers are willing to spend more money on
automobiles. 27% of our respondents are willing to pay more than £25k and 18% are
willing to spend between £20k-£25k. In Figure 3, the majority of females prefer a hybrid
with a price range of £15k-£20k.

Men seem to prefer hybrids

between £20-£25k and
electrics, costing more than
£25k. We will discuss further in
our recommendations section,
but at the very least we can say
that Peugeot can use this price
anchoring to their advantage.

Figure 3 - Engine-Type + Price Preferences, Given Gender

As it relates to our survey, we would like to

reiterate that brand rank was done from a
scale from 1 to 7, with 1 being the highest
rank. According to figure 4, the lower the
bar, the higher the rank. Our initial motive
was to identify how engine preference
would correlate to how respondents ranked
Peugeot. Our findings were this: on average,
young buyers who preferred Hybrid Engines
ranked Peugeot more favourably than
competitors. This is interesting because
Peugeot has only one hybrid model—the
508—and it is not currently being advertised
to young car buyers in the EU, as is model Figure 4 - Brand Rank Given Engine Preference

208.
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Recommendations

Peugeot’s main customer markets are located

in Europe. As part of our research, we
investigated the preferred engine type of each
respondent to have a better sense of what
future investments should be focused on. In
terms of the four options being electric, petrol,
diesel, and hybrid; 68% leaning toward the
hybrid model. If we look at the data
geographically, it is evident that some lean
more towards petrol—France and Germany—
while others prefer an electric car—United
Kingdom, Albania, and Austria.
Figure 5- Engine Preference by Country

As the world shifts towards reducing the carbon footprint, we believe that Peugeot
should focus on the electrical and hybrid engine. We recommend that every quarter, a
certain percentage of production dedicated to diesel engines should be shifted to either
hybrid or electric.

Figure 6- Accessory Preference by Country

The figure above demonstrates the top two preferred car accessories distributed by
country of origin of the respondents. In general, young buyers are more willing to
pay for both a sound system and a navigation system; this is beneficial when
formulating a good marketing structure. The information can help to determine
what features of the car to highlight. This will depend on the country where the
campaign is being launched. For example, the young Italian buyers are more
interested in investing in the sound system and LED Headlights of the car, whereas,
a young buyer from the UK may be more inclined to express more interest in the
navigation system and sound system.
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Future Opportunities
Furthermore, it might be worthwhile for
Peugeot to develop a low-cost hybrid model
for uncaptured young female market share. As
discussed before, females have shown a
tendency to prefer hybrid models from £15k-
£20k, but no such model—at this specific price
point—exists within Peugeot’s product mix.
Peugeot can leverage both technology and
production efficiencies to drive cost down for
the 508, or they could alter the design of the
208 to accommodate a hybrid infrastructure,
which in the short-run may be a more cost-
efficient way to innovate.

Knowing that the majority of young car buyers

prefer using Instagram, Peugeot should increase
its presence in the platform. A significant
investment should be made to campaign the
electric 208, with a slightly larger share of that
investment used to target young males, who have
shown a preference to pay higher than advertised
cost for an already existing product (the 208) with
Peugeot. Advertisements should be structured to
include both a link and a product description,
with significant interaction coming from the
influencer as a follow-up post. With the help of
prominent influencers, we can flow ad traffic into
Peugeot’s sales funnel by tracking impressions,
engagement, and viewership, and then stopping
midway through to check for consistencies
between this report and investment. If the target
audience seems to shift for any reason, either a
new campaign can be run, or further market
research should be completed.
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Recommendations
Lastly, according to data collected from Deloitte, the car/ride sharing mobility market is
growing at a rapid pace, which has begun to shift how young buyers perceive a car
investment. With so many substitutes, Peugeot should start thinking of ways to enter
this particular market. As a recommendation, we believe that a partnership with
companies like Zipcar, a membership-based car renting app, can be a profitable
initiative. This initiative will provide a first-mover advantage, with both Peugeot and
Zipcar operating under a licensing agreement for a certain amount of model 208s each
quarter. Peugeot will receive 100% of the revenue, while Zipcar charges an agreed-upon
rate. The volume of 208s that are “nearby” for users and the following positive driving
experience will be an invaluable source of marketing.

The 50-50 share merger between Groupe Peugeot Société Anonyme and Fiat Chrysler Automotive
helps these two enterprises differentiate and explore new possibilities of growth. With this merger,
PSA and FCA are the fourth-largest automakers in the world, next to the VW Group, Toyota, and
the Renault-Nissan-Mitsubishi Alliance. This is an amalgam of automakers from different
countries, amounting to a total of 8.7 million cars sold annually. With this merger, both companies
could reach a synergy: by sharing new technologies and trying to reduce costs of production and
by working together via incisive marketing campaigns. Fiat is the primary car player in Italy so
that Peugeot might expand its market share in the Italian market with some advice from its partner.

THIS CONVERGENCE BRINGS SIGNIFICANT VALUE TO

ALL THE STAKEHOLDERS AND OPENS A BRIGHT FUTURE
FOR THE COMBINED ENTITY,

Carlos Tavares, CEO

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Bibliography

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https://www.brandwatch.com/reports/consumer-trends-for-2020/view/

Cruz, A., Loubriel, C., Kleiner, M., Mancini, M., & Ferracciolli, O. (2019). Young Car
Buyer Survey [Survey]. Survey Monkey. London.

Deloitte. (2019). 2019 Deloitte Global Automotive Consumer Study (p. 4).
Deloitte. Retrieved from
https://www2.deloitte.com/us/en/pages/manufacturing/articles/automotive-
trends-millennials-consumer-study.html

English, A. (2019). 2020 Peugeot 208 review: can this beautiful French supermini
really change the way we drive?. Retrieved 12 November 2019, from
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beautiful-french-supermini-really/

Fiat and Peugeot announce plans to merge. (2019, November 1). Retrieved
November 13, 2019, from https://www.theengineer.co.uk/fiat-peugeot-merger/.

Joyce, G. (2019). 2020: Consumer Trends for the Auto Industry. Retrieved 13
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industry-2020/

Oliva, J. (2019). PSA-FCA Merger Will Retain All 13 Automakers In The Lineup.
Retrieved 10 November 2019, from https://www.motor1.com/news/381354/psa-
fca-merger-13-brands/

Weiner, L. (2008). Frequently Asked Questions: Zipcar [Ebook]. Retrieved from

http://org.elon.edu/sustainability/documents/Zipcar%20FAQs.pdf