PSA Peugeot Citroën has hired former Renault SA executive Carlos Tavares to take over as chief executive next year. With this move it hopes to end its six-year slump in the European market. Tavares, 55, will replace Philippe Varin, the 61-year-old current chief executive officer. Tavares will join the management board on Jan. 1 but an exact date in 2014, for the take over was not specified.
Philippe Varin, 61, has served as CEO since 2009, following the departure of Christian Streiff, and his contract was renewed by the supervisory board on March 12 for another four years. While Varin was reportedly seeking a manager who would initially serve as a top lieutenant while he plans an eventual retirement, the move to hire Tavares at this time is mostly likely due to the financial losses that continue to plague the company
Before departing, Varin plans to focus on strategic discussions with potential partners, Peugeot said.
The automaker is holding talks to expand an existing collaboration with Dongfeng Motor Corporation to lower Peugeot’s reliance on Europe, where it sells more than 50 percent of its vehicles. Peugeot has proposed a capital increase of at least 3 billion euros, in which Dongfeng and the French state would take equal holdings of about 20 percent, people familiar with the talks said last month.
However the latest rumor on the DongFeng deal is that the plan has hit a snag as Dongfeng seeks a smaller stake than first discussed, buying only about 10 percent. The Chinese company is more interested in expanding an existing industrial venture than purchasing a stake.
Carlos Tavares left Renault at the end of August, two weeks after he publicly stated in an interview the he did not want to wait for CEO Carlos Ghosn, 59, to retire, but was looking to run General Motors or Ford Motor instead. When Mr Ghosn returned from the summer break an emergency board meeting was called and it was announced that Mr Tavares was stepping down immediately “in order to pursue other personal projects”.
Tavares spent more than three decades at Renault and affiliate Nissan Motor Co. (7201), rising through the ranks to eventually take over as Ghosn’s second-in-command at the French automaker. Tavares, who races cars himself, was working to add a sports-car brand and luxury marque at the Renault group. Under Tavares, Renault reported unexpected growth in first-half profit as labor-cost reductions and higher vehicle prices more than offset an industrywide slump in European deliveries. When Tavares oversaw North America for Nissan, 43 percent owned by Renault, he helped the company earn 209 billion yen ($2.05 billion) in the region in the year ended March 2010, versus a 46.7 billion-yen loss in 2009.
Tavares’ task to return PSA Peugeot Citroën profit will be a formidable one; – stop cash burn and expand outside Europe. With North American first-hand experience, we wonder if part of his expansion strategy for PSA Peugeot Citroën’s could be a to return to North America?
Peugeot gained 52 cents, or 5.1 percent, to € 10.75 at the close of trading today in Paris. Renault was also higher, up 1.4 per cent at € 65.3.