How Carlos Tavares plans to save PSA Peugeot Citroen

Given our genteel surroundings, it hardly seems polite to suggest that this latest tiny profit might be window dressing, a morale boost for employees and PSA’s three major shareholders, Chinese group Dongfeng, the French government and the founding Peugeot family.

I make it anyway, but Tavares is unruffled. “If it had been about window dressing, I would probably have arranged things to go in the opposite direction, because one might think it was too soon to show a profit,” he says. “But the truth is we have good things on the way. We didn’t push any metal; this was a natural achievement. But we have a long way to go.”

There is no rocket science in the remedies, Tavares insists. “The break-even point of the company was too high – above its net sales – so it’s no surprise we were showing red ink. Our job was to start reducing our fixed costs, improving the net pricing of our cars and cutting manufacturing costs – and we also saw some low-hanging fruit that allowed us to begin improving immediately.

"The good news is that when you move those three levers the right way, you see an immediate Improvement. That has done wonders for morale.”

From previous experience, I know Tavares will try to answer any question, so I ask how it feels at last to be the undisputed boss of a very large, if troubled, car company.

The answer is gratifyingly straight: “I feel very free. I have a lot of autonomy. The shareholders know the detail of the plan, and they all ask for the same thing: please fix it. I meet the supervisory board every two months, but beyond that they’re hands-off. It’s a great way to work.”

Encouraged, I ask how hell-bent Tavares is on ‘showing’ Ghosn and his former colleagues at Renault what a recovery looks like. “Not at all,” he insists. “I have hundreds of Renault friends and I’m still in touch with many. It’d be fine with me if Renault were to succeed too; that would be great for the whole country. In any case, at PSA we have only three per cent of the total world market. That leaves 97 per cent to aim for. Why should I concentrate on just one rival?”

Unhappy with this comfortable answer, I press a little further, whereupon Tavares says a telling thing: “The only valid comparison you could make with my former company is to compare PSA’s situation with the recovery of Nissan in 1999.” (We’re talking here of the famous ‘Ghosn miracle’ described in the book Shift.) Do you often make that comparison, I wonder. “No,” Tavares fires back, “though I know we are going faster…”

Surely it helps to be the group’s first leader for many generations who is a genuine ‘car guy’, I suggest. But Tavares is reluctant to make any big claims.

“It certainly helps that I believe I can excite and enthuse our engineers and designers by talking their language,” he says. “But we have to remember we’re producing cars for customers, not for Tavares. Far better to rely on the judgement of clinics, where we test everything thoroughly.

“Mind you, our executive committee drives a lot of cars nowadays. I’ve spent at least a day a month just driving since I’ve been here. Our aim is to engineer cars that can work in all markets, provided we leave room for a layer of adaptation. Markets as disparate as Asia, Russia and Brazil need their own final spec.”

One powerful driver of change – begun already but not due to finish until 2022 – is Tavares’s keenness to rationalise the group model range.

He sells the concept well, pointing out that during the two-year, £5 billion loss period, PSA had 45 different models in its showrooms in a market with around 20 different categories. “Having lots of models doesn’t protect you,” he says. “We proved that. So why do I need so many?”

Tavares is exaggeratedly careful about not letting his own passion for motorsport skew group policy, although he does let slip the killer fact that “none of the really great car brands lacks a motorsport heritage”. When you think about it, he’s right, with the possible exception of Rolls-Royce.

Given that he wants to profile Citroën as comfortable, easy-going and sometimes surprising, it’s pretty clear that the marque’s WTCC and rally programmes may not ultimately fit, but they’re useful for now because Citroën is still building brand recognition in far-flung places.

The newly independent DS will concentrate on being fashionable and artistic, but Peugeot, which Tavares says mixes Latin flair with Germanic detail engineering, looks certain to stay on the track.

Tavares’s own motor racing career also looks set to keep flourishing. This year he has tested Sébastien Loeb’s WTCC car at Spa, driven a Peugeot RCZ R in endurance races and raced a ’70s Porsche in historics and is shaping up to punt a friend’s 550bhp Lola T70 before the season ends.

All this amounts to 18 racing weekends this year, part of a private life in which Saturdays and Sundays are sacrosanct, for spending with his family and on his hobby. Work days are scarcely any less regimented: Tavares leaves home at 7am, sorts his emails for an hour in the car, starts work in the office at 8.30am with the mail done and finishes the day at 6.30pm sharp. 

Exactly 30 per cent of the PSA president’s work time is spent out of the office, meeting dealers or walking plants and design studios. The rest of his time is efficiently managed by an unofficial duo consisting of his wife and his Peugeot PA. 

“I hate to be pressurised by my agenda,” he says, and history shows that what Carlos Tavares wants, he almost always gets. And what he wants next – very badly indeed – is a full-blown PSA recovery

Carlos Tavares on...

Growing DS

”Look at the VW Group today. Volkswagen earns one to two per cent, Audi earns 10 per cent and Porsche earns 25 per cent. That tells you something about the earning power of premium cars. It’s why we decided to create a premium brand rather than sit idly in the station and watch the train depart. Of course, we recognise it’s a very long-term task. We’re doing this for the next generation, not ours. It’s 30 years from the NSU Ro80 to Audi today. But we’re already making good money with our DS models and we hope to do a lot better.”

Engine co-operation deals

”Looking at how many manufacturers have created small-capacity, three-cylinder turbocharged engines recently, it seems a pity that the industry was not able to co-operate more. It doesn’t make much sense for companies to manufacture such similar products in a low-margin industry like ours. In future, managements may need to be firmer – provided they know that they can buy at a price that won’t hurt their profitability and that they won’t lose a capability they might need for the future.”