Currently reading: New PSA boss Tavares warns of model cuts
New Peugeot Citroën boss Carlos Tavares says his firm could downsize its model range, and sets out his plan to return the company to profit

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.”

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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.”

Does PSA need a value brand, like Dacia?   

“We are not in a hurry to make entry-level cars. We have two brands with long and deep histories, plus DS, which has been very successful. People do not ask for entry brands, just for competitive cars.”

How do you define the differences between Peugeot and Citroën?

“A Peugeot is the perfect convergence of the rigour and seriousness of a German marque with the emotion of Latin cars. It sits at the top of mainstream: elegant and sophisticated without being a show-off car. A Citroën stands for a trendy way of French life that works even better outside France than in it. It is about comfort and ease of use and useful innovation. A Citroën is bright and smart and makes your life better. The new C4 Cactus is the perfect Citroën.”

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rmcondo 17 March 2014

In my view, what Citroen has

In my view, what Citroen has and needs to be is DS. The rest is Peugeot. With DS character and quality, the range would currently be DS3 (incorporating a 5 door to replace the C3), DS4 (that includes a version to replace the C4) and DS5 (that includes versions to replace the C5) and ideally a DS6 to recapture and modernise the key elements of the original DS, as evolved.

What's left, with its ordinary cars and vans, is Peugeot, enabling a reduction in models by way of overlap.

Mini2 16 March 2014

Much better.

Having just got back from the Geneva Motor Show, both Peugeot and Citroen's offerings on the whole are now looking far, far stronger. The C5 and C3 look a little dated on Citroen's stand, but their new C1, DS range and C4 Cactus were attracting plenty of attention, and rightly so. Peugeot's stand was also in a far better position, with a distinct feeling of quality and class everywhere. The new 308SW is particularly impressive in terms of quality - the interior is certainly very VW in terms of fit & finish. Also hugely spacious in the boot with a generally elegant appearance. Many have accused it of just being dull, but it does offer something attractive, if not apparently as strong an all-rounder as the Golf. I just hope they don't do too much of a Renault strategy; I can't really think of many cars that Peugeot or Citroen should be dropping at risk of losing too many customers!
ordinary bloke 16 March 2014

That last sentence

about the C4 Cactus is very encouraging for the future of Citroen at least - personally I think that they need to make Citroen different in public perception form Peugeot to a very marked degree. Peugeot should be a "quality" Ford but with more individuality than a VW. Citroen should be more innovative and "out there" than the mainstream offerings from Ford / Opel-Vauxhall / VW etc, it should be a more emotional purchase, bought because people like it rather than it just doing the job well, like VW; nobody loves a VW - they respect it - but they should fall in love with a Citroen because of what it is not because of what it does alone. Good luck to Mr Tavares - he'll need it.