Citroen has been accused of driving the dealer network into meltdown by attempting to push the brand away from its traditional ‘value for money’ appeal while squeezing dealer margins.

The end of Citroen VAT or cash back offers – the means by which it has over more than a decade gained a reputation for economical motoring and carved out a market share close to 4% in 2009 – has left dealers struggling to compete.

Citroen’s network sales are reportedly a long way off its February targets and the order takes are “considerably” down on last year.

One Citroen dealer told AM: “The network is in meltdown with dealers not knowing how to react to consumers voting with their feet and taking their money to competitors in a position to offer the deals Citroen had built strong customer loyalty around, but have now been denied us.”

He said dealer margins were cut to the bone leaving no room for negotiation with customers and transaction prices had increased by around 35%. Citroen dealers had experienced their worst January “in living memory”.

The dealer said the solution was for Citroen to “negotiate with Paris” and provide financial support to dealers in order to give them the freedom to negotiate deals with customers.

“Transaction prices have got to come down – Citroen has got to dig deep to help its dealers financially,” the dealer said. “Otherwise we will see dealers abandoning the franchise.

“Citroen is right to move the brand away from one the customer simply judges on price, but the move is being forced too quickly.”

But Citroen denied there was disquiet in the network.

“We increased market share year-on-year in January. We’ve moved from making a net loss in 2008 to making a profit in 2009. That must show dealers are able to make money out of selling our cars,” a spokesman said.

“The franchise is buoyant and we are confident dealers have an unparalleled new product offering, including C3 and the DS3. Our prices are also comparable and offer better value than other major vehicle manufacturers.”

Citroen UK is now “actively recruiting” a new sales director following Simon Monahan’s departure at the beginning of the month.