Carlos Tavares - the boss of the renamed, rebranded PSA Group - didn’t hold back in his hour-long presentation about the future of the company last week.
Tavares joined PSA in 2014, when the family-controlled company was looking decidedly close to death. He had been one of Carlos Ghosn’s right-hand men at Renault when he publicly expressed enthusiasm for running a car company himself and perhaps one that wasn't Renault-Nissan.
Tavares was soon on the job market, but quickly found himself running PSA. If he wanted a challenge, PSA was about as big as it got. Tavares finally gained access to his office just a few weeks after the company was rescued by a buy-out involving the French state and Chinese car maker Dongfeng.
Each took a 14% share in the company for a cash injection of around £650m. A deal had to be made to keep PSA’s finance arm open, a factory was closed and 11,000 jobs went - an almost unthinkable move in modern France. However, with losses of £4bn in 2012 and £1.8bn in 2013, this was not as unthinkable as the whole operation grinding to a halt.
Tavares’s packed presentation last week opened up with a very punchy figure. The average PSA profit margin between 2001 and 2015 had been just 1%. It’s a remarkable admission. A 1% margin does not seem to be remotely enough to pay for the next generation of new products, so it’s hard to see how Peugeot and Citroën managed to navigate its way through the last 15 years.
True, Tavares finds himself in the remarkable position of seeing a turnaround in Peugeot’s fortunes that nobody expected. In February PSA announced that it had made profits of around £730m in 2015, compared with a £517m loss in 2014. That’s a remarkable £1.25bn turnaround in just 12 months.
He also wants to see PSA’s newly gained 4% profit margin retained for the next three years, before pushing it up to 6%. Perhaps even more surprising, he wants the average price paid for a new Peugeot in 2021 to be 0.5% higher than for the average VW.
Transforming Peugeot into the leading mainstream European car maker, as well as expanding the Peugeot, Citroën and DS brands globally, is a tall order, but Tavares’s presentation made it clear he was expecting the reborn PSA to behave in a most un-French way.
It may be a generalisation, but the French car industry has long had a streak of doing things its own way and in its own time, an approach that didn’t suit the modern era in which engineering eccentricity and loyal home markets were things of the past.
Citroën has surely struggled to find a new identity after decades of innovation and eccentricity. It became a kind of mainstream discount brand, stuck with rather plain-jane hatches and MPVs. It, like other French brands, resisted conventional SUVs.
Peugeot probably had the sharpest modern-era brand, thanks to excellent chassis dynamics and smart Pininfarina styling, but it too lost its way, especially in the mainstream hatchback market (307 anyone?), and sales sunk well below the targets it had set itself in the 2000s.
Somehow, despite facing a slow post-credit crunch slide into oblivion, PSA seems to have suddenly snapped into focus. Cars such as the Peugeot 308 and Citroën C4 Cactus are the most convincing French models of recent years, and there’s more to come.
Although the DS brand looks like it will remain half-formed - even Tavares’s punchy presentation admitted that, by 2021, DS would only be commanding average prices that are just 77% of what the German premium brands manage - Citroën and Peugeot now have proper mission statements. Knowing why you are making the cars you do is half the battle when trying to entice customers.
However, Tavares also seems to be demanding that PSA staff snap out of France’s consensual 35-hour working week mindset and fight in every area for profits and revenue growth. His final slide at the Paris presentation had a whiff of American-style bare-knuckle capitalism about it.
'Performance matters more than size’ - a lesson from the VW brand woes perhaps - was followed by ‘Customers need mobility beyond ownership’ - surely a warning not to miss the next big trend, should it happen. ‘Growth is reward for a job well-done’ - don’t think it will be achieved any other way - and be ‘ready to grasp new opportunities’, such as sudden market shifts in consumer taste.
We should wish Tavares well on his mission to re-invent the French car-making mindset. A stand-up meeting and a pinged reminder from the Google calendar could well be replacing the leisurely coffee and Gitanes approach of the past.