Peugeot 508 review: good enough to break the German saloon hegemony?

Andrew English
2018 Peugeot 508 - all-new model

Hello both of you. That’s the two Telegraph readers who will, by my estimate, be stumping upwards of £25,000 for the all-new Peugeot 508 when it arrives in the UK this October. This test is for you, you crazy Peugeot-loving fools. Because selling large saloons in Britain is a dying art, particularly if you are not a German brand.

Yet these days even the Germans struggle to sell their generic saloons. Don’t ask about Mercedes-Benz’s and BMW’s discounts on their respective C-class and 3-series; it’s not good to see a German cry.

The market in Europe might still be 1.5 million, but non-premium makers are struggling even more; Ford won’t even replace its Mondeo and don’t ask Vauxhall about the profitability of the Insignia.

The French, meanwhile, have sort of given up. Renault stopped selling its ugly Laguna in the UK in 2012 and Citroën withdrew its lacklustre C5 in 2016 after UK sales of only 237 the previous year. Peugeot’s best big saloon was the elegant Pininfarina-designed 505, which it stopped selling in 1992. It was the Lion’s last rear-wheel-drive car; indestructible and fine-riding, it was built in Sochaux on the French border with Switzerland.

Its successor, the front-wheel-drive 405, wasn’t a bad car, but got successively less good through the 406 and 407 revamps, so by 2011 when the previous version of 508 appeared, we were heartily sick of the same old, same old. Besides, as David Peel, Peugeot UK’s MD says: “We killed that car.”

The all-new 508 is a handsome design - it's not bad to drive, either

Not that the outgoing 508 was appalling, but as Peel explains it is poor residual values that kill big saloons, because they determine the balance of the monthly finance payments. The new 508 will sell mainly to fleets, where economies of scale mean that no one pays the full retail price.

So private buyers have to pay through the nose, while manufacturers push tin through outrageously discounted channels such as one-day hire fleets, month-end pre-registrations and car brokers. Everyone gets hooked on discounts and the victims are retail customers and ultimately the reputation of the car makers. The end result is a low residual value. In this sector, residuals can make a bad car good and a good car bad.

Well it’s all change now for the new 508, according to Jean-Philippe Imparato, Peugeot’s chief executive. Peugeot doesn’t do discounts any more and the boss says he isn’t going to push this new car at the markets, “because I don’t care if you buy this car”.

The interior has a premium feel, with comfortable seats and plenty of space, although some drivers will find the small steering wheel a little odd

This extraordinary statement is motivated by the fact that Peugeot is making 60 per cent of its profits on the 2008, 3008 and 5008 SUVs and another 33 per cent on its light commercials, so Imparato doesn’t need to feed the discount shark pool. “I will not kill the profitability of this car,” he says, “I don’t need to discount 30 or 40 per cent... because if I kill the pricing, I kill the residuals.”

We’ve heard all this before, of course, but Imparato has an impressive track record. His company’s SUV models have not been heavily discounted and Peugeot’s residual values have climbed as a result, with the 3008 now standing at 54 per cent of its original value after three years - as opposed to 38 per cent on its predecessor.

As Peel says: “I haven’t done a deal or pushed month-end registrations for two years now. Our residuals are up and I keep those gains in the deal, so our customers get a pleasant surprise at the end of the three-year [lease] term.”

Jean-Philippe Imparato, Peugeot’s chief executive, reckons there’s a genuine market for people looking not just for a change from the generic German saloon, but also out of SUVs

In the language of dependency, Peugeot is (almost) clean, but isn’t trying to push a saloon into a crumbling market a strategic error as significant as invading Russia in the winter?

Imparato unsurprisingly says not, he thinks there’s a genuine market for people looking not just for a change from the generic German saloon, but also out of SUVs.

So is this the start of the fight-back against SUVs? He stops just short of that, but admits that at some point the SUV bubble will burst.

So is the new 508 capable of breaking the mould? It’s certainly a great looking car, partly because it’s a hatchback with frameless side windows, partly based on the Exalt concept from the 2014 Paris motor show.

The new 508 was heavily influenced by the Exalt concept of 2014

The back has such lovely curves with lovely rear lights under glass, which look fabulous paired with metallic midnight-blue bodywork. The front works well, too, muscular with gentle cutouts, that weird drying-handkerchiefs grille pattern and, in a nod to the 1969 Peugeot 504 coupé, there’s a 508 badge on the bonnet. It just feels as though they’ve had some fun here and with its slightly smaller size, the proportions are more manageable than some rivals.

It’s based on the company’s EMP II platform, which helps with the 70kg weight reduction compared with the outgoing 508. This also provides a new, noise-isolated front subframe, along with improved geometry for the MacPherson strut front and multi-link rear suspension.

The engines are PSA HDi turbodiesels displacing 1.5 and 2.0 litres with various power outputs, as well as two versions of the four-cylinder, 1.6-litre petrol originally developed by BMW. There’s a new eight-speed, torque-converter automatic gearbox (the lowest power 129bhp turbodiesel has a six-speed manual). Drive is to the front wheels and there are at present no plans for a 4x4 version, although it would be possible with next year’s plug-in hybrid, with electric drive to the rear axle. An estate version also arrives next year.

The handling is best described as sporty. The optional adaptive damping, at £1,000, is well worth specifying

The cabin (known somewhat pretentiously as the “iCockpit”) is actually pretty good. I found the seats comfortable with more than enough room to sit behind myself and there’s just room for three adults across the back seat. The boot is large and the £400 power-assisted hatch swings up to allow an ease of loading we’ve not seen since Saab stopped building its 900.

The dashboard takes its design cues from the Exalt, with radical curves, matt-finished materials and lovely (and impeccably joined) materials. There are a few bum notes, not least the way the actual size of the centre screen is much smaller than the glass panel it sits within, the door pockets are flimsy and the tonneau over the load space is clunky and cheap.

Peugeot is persevering with its tiny (14in diameter) steering wheel ethos, which polarises opinions. It means taller drivers can’t see the instrument binnacle unless they have the wheel in their lap and the back of the wheel is overcrowded, with three function stalks and two gearchange paddles.

The materials used in the cabin are of high quality and are well assembled. The eight-speed automatic transmission has torque converter for smoothnes

We started in the 225PS top-model petrol in GT form, which is gutsy and powerful, but seems at the apogee of its development as it fires vibration through the major controls. It’s also noisy and a bit peaky, so the auto ’box has to be busy when you’re pressing on. This all becomes a bit frantic in Sport mode, when the steering gains a strange artificial weight and the gearbox hunts incessantly for the correct ratio.

The ride on 19-inch tyres is a strange mix of wallowing body control over long bumps and noisy, abrupt reports over small ones; Sport mode is unpleasant, Normal feels more natural. The driveline and handling improve as you speed up, but dynamically this version isn’t a particularly well-rounded car.

The equivalent 177bhp 2.0-litre turbodiesel is a big improvement, with a better ride quality and more low-rev torque (not to mention much better economy), while the new 1.5-litre diesel is no slouch either, especially with the manual transmission which allows you to ride the low-rev torque.

The bonnet badging harks back to classic Peugeots such as the 504 coupé of the late Sixties

The best of the bunch, however, is the 177bhp version of the 1.6 petrol on 18in rims and with optional adjustable damping, which provide a much improved ride quality, with only a fraction less turn-in speed and all round useable dynamics, while the steering feels more confidence-inspiring.

This is good because, in GT Line trim at £31,200, this version is predicted to be the UK’s bestseller.

Watch the options, though, as  by the time you’ve added £575 worth of metallic paint, £1,000 of adaptive damping and £1,850 of full-grain leather upholstery, you’re rapidly getting close to the full GT trim cars and the more powerful petrol engine.

Strangely the brakes on these early pre-production cars seemed quite variable, over-servoed and abrupt on some but well modulated and progressive on others.

The 177bhp version of the 1.6 petrol on 18in rims and with optional adjustable damping is English's pick of the range so far

Attractive and fine-driving it might be, but it’s hard not to image Imparato and Peel as Don Quixote and Sancho Panza at the wheels of 508s charging the windmills of the diminishing UK D-segment, which currently stands at 120,000 cars a year.

A tempting image to be sure, but for a couple of points: first, worldwide the D-segment remains one of the three most important, particularly in China, the world’s biggest car market, where the 508 is already made in a stretched version to suit Chinese tastes. Secondly, the outgoing 508 is a very strong contender in France, where Peugeot has a reputation equivalent to (and even surpassing) that of some premium rivals.

In other words, in Britain Peugeot doesn’t have to try too hard and that might be the key to this car’s modest success. So you two buyers, wherever you are, have fun in your 508s, because it’s going to be a rare sight on UK roads – although it’ll be worth seeking out and that number could swell to make the 508 more of a success than anyone imagined.

THE FACTS

Peugeot 508 BlueHDi 180 S&S EAT8

TESTED 1,598cc four-cylinder turbo petrol, eight-speed automatic gearbox, front-wheel drive

PRICE/ON SALE range £25,000 to £37,400 (as tested £36,975)/July for delivery in October

POWER/TORQUE 177bhp @ 6,000rpm, 184lb ft @ 1,750rpm

TOP SPEED 143mph

ACCELERATION 0-62mph in 7.9sec

FUEL ECONOMY 52.3mpg/39.8mpgEU Combined/Urban. On test 35.3mpg

CO2 EMISSIONS 123g/km

VED £165 first year, then £140

VERDICT Trying to sell non-premium saloons in badge-obsessed Britain is a thankless task and you shouldn’t bet the farm on the 508’s prospects. But in some ways the company is approaching this the right way, not discounting, protecting buyers’ investment, and there is rather a lot to like about this great looking car, particularly the sporting handling and lovely interior. The forthcoming estate might be a better all-round bet, however.

TELEGRAPH RATING Four out of five stars

THE RIVALS

Volkswagen Arteon, from £31,100

Super-finessed and refined replacement for the Passat CC. Nicely done, very elegant, quiet, economical and relaxing to drive but, dare we say it, a tiny bit dull.

Audi A5, from £33,845

A good-looking car much liked by those bored to tears by the ubiquitous A4, but Audi has had this market to its own for too long; the A5 doesn’t drive as well as it should and it’s too expensive.

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