New PSA boss Tavares warns of model cuts

Carlos Tavares, new CEO at PSA Peugeot-Citroën, says his firm could look to reduce its model range as part of plans to return the company to profit.

Speaking for the first time since taking over the top job last year, Tavares said PSA wanted to retain its position as a general market manufacturer, but warned that the current model range will shrink.

Tavares joined PSA after a long and stellar career at Renault-Nissan ended abruptly in a dispute with group chief Carlos Ghosn over promotion. He spoke to Autocar about his first impressions and intentions at PSA.

Who offered you the CEO’s job and how long did you take to accept?

“The first contact was by phone, through a headhunter, and soon afterward I met members of the supervisory board. I decided to accept in the time it takes to discuss such an opportunity with your wife. I had several options. This wasn’t the hardest on offer, but it was the biggest challenge, which is why I chose it.”

What were your early impressions of PSA?

“From the outside, it looked a Eurocentric company, without enough appetite for global operations, though this has been changing. I was impressed by the quality of the products, and especially by the very specific DNA of Peugeot and Citroën. These things don’t just happen by chance, so I expected to find people of talent at PSA, with similar skills and background to those I worked with at Renault. That’s what I have found. They are the company’s biggest asset.”

What about business aspects?  

“It seemed to me that the company’s profit culture wasn’t well developed. Making money wasn’t at the core of its activities. But if you don’t make money, you put yourself in difficulty.”

Will you be able to work with a supervisory board?

“We have a dual organisation, a system of shared responsibilities. My job is to build the business and implement decisions that are agreed jointly. I believe I have more responsibility than the usual CEO, which is fine.”What are the priorities for PSA?

“We must stop the cash burn, hopefully by 2016. Burning cash increases debt and helps pull the company down. To fix things, we must take three steps: increase operating profit by making sure our pricing is good, accelerate progress in reducing costs — one important way is to reduce stocks, which are higher than other companies — and establish better rapport with suppliers to control component prices.”

What about dropping models? You took out unprofitable cars at Renault…

“Remember, we want to maintain our position as a generalist manufacturer. That’s the first thing. But we will be more selective with what we build in future. We won’t invest where there is no business. Everything I’ve learned tells me we must make cars to beat the competition, so buyers will want that car, not just a car. We have not yet identified models to drop, but there will definitely be a reduction.”