Peugeot’s turnaround guru tells car industry he’s open for deals

GENEVA • Among the scores of auto executives descending on Geneva for the annual car show this week, Carlos Tavares stands out with a blunt message — adapt or perish.

For the 60-year-old CEO of Peugeot owner PSA Group, that means seizing opportunities for growth. Tavares is meeting with advisors with a goal of finding a partner for PSA that will transform the French automaker into a global force, Bloomberg News reported on Monday.

Such a deal — whether a merger or an alliance — could vault PSA into the ranks of the world’s biggest carmakers and make Tavares a dealmaking titan akin to Carlos Ghosn and Sergio Marchionne.

While PSA is immediately focused on strategic initiatives such as bringing the Peugeot brand to North America and expanding Opel to Russia, “we are also open for business”, Tavares said in a Bloomberg TV interview from Geneva yesterday. “We want to be open and try to look for the best opportunities for our company.”

Given the uncertain response from consumers to new technologies, there’s a risk Tavares will place the wrong bet, but there may be greater danger in standing still amid the upheaval facing the traditional auto industry. The approach echoes the consolidation once championed by the late Marchionne, architect of Fiat Chrysler Automobiles NV.

Gaining scale would help PSA spread surging development costs for electric and self-driving cars, and brace for new competition from tech companies like Uber Technologies Inc and Alphabet Inc’s Waymo muscling their way into the industry.

Even Volkswagen AG, already the world’s biggest carmaker, is looking for ways to shoulder the burden by exploring deeper collaboration with US rival Ford Motor Co. At the same time, BMW AG and Mercedes-Benz parent Daimler AG — traditionally the bitterest of rivals in the luxury-car segment — have agreed to cooperate on self-driving cars and last month combined their respective car-sharing platforms.

Turnaround Surprise

Tavares — who joined PSA five years ago after serving under Renault-Nissan’s disgraced former boss Ghosn — is said to view Fiat Chrysler, General Motors Co (GM) and British carmaker Jaguar Land Rover as attractive, the people said.

At PSA, Tavares did what many in the industry thought was impossible: Turning around PSA, then repeating the trick by making the perennial money-loser Opel profitable just a year after its acquisition from GM in 2017.

The executive pushed Opel’s unions to accept job losses and slashed costs on everything from printers to company phones — a method he had already used when PSA was near bankruptcy. Research and development expenses at Opel were slashed by piggybacking new models onto existing platforms of the parent’s Peugeot and Citroen brands.

While Tavares delivered a stellar turnaround at Opel, the company still has problems outside its home turf. Sales in China, the world’s biggest auto market, slumped about a third last year, partly because of a poor product lineup and issues with its dealer network, prompting speculation the company might quit the market altogether.

Change or ‘Die’

But Tavares is keen on expanding PSA’s footprint outside of Europe, with plans to introduce Peugeot to North America some 30 years ago after throwing in the towel. He also wants to bring Opel to Russia and Citroen to India.

The racing enthusiast contends he’s positioned PSA to capitalise on the industry’s turmoil, with a lean approach that could absorb the operations of less-efficient competitors, if opportunities arise.

“We know how to turn around companies,” Tavares said in the interview. “We are working very hard on new ways of doing business. Some of them are going to surprise, some of them are going to disturb. But this is the way we need to move, because if we don’t move, then we die.” — Bloomberg