Ford went to a lot of trouble to prove the wisdom of Rule 1 and only when the Ford dynasty and every one of the Henrys were chased out of the power house did the company’s full potential emerge.
Peugeot – founded in 1810 – has spent two centuries proving the same thing and only now is the family reluctantly ceding much of its control.
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The French state is buying in (Rule 2: never let a government run a car company) and the Chinese Dongfeng car company is mopping up the rest (Rule 3: never shake hands over a chicken chow mein).
A deal has been made with Banco Santander whereby it will keep Peugeot’s lending arm afloat (Rule 4: never trust a bank.)
Analyst Max Warburton of Bernstein Research says Peugeot is burning through three billion euros a year and has to scrap another plant and freeze investments to get the problem under control. The French government predictably says that there is no way it will allow the employment loss implicit in plant closure.
It stood in the way of the Aulnay, Paris factory closure, initially and has now said that – in its role as major shareholder, it will not accept any more cuts.
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By GlobalDataInto this turmoil steps one Carlos Tavares whose first concern as chief exec is likely to be the brouhaha twixt government and company…a matter that should be familiar to him in that he is late of the state-owned Renault.
The major fix that is needed in a hurry is the lack of profitability. Last year it was under water to the tune of three billion euros. The run rate for this year is a one billion so progress is being made. Debt has also improved by a billion.
PSA’s dealers say that there is nothing wrong with the cars, their specs or the prices. Market share at 13% is not a bad place to start. All that is needed is a better response from the potential buyers who have yet to catch up with the improvement in the quality of the cars.
Tavares also marvels at the breadth of the portfolio. There are sixty cars. Tavares asks why the company does not promote the cars that people want rather than building cars that need massive marketing support and lose their margin in the process. “Many of our cars are just a distraction for dealers.”
The man appears to be a free-thinking, free-spoken breath of fresh air for the French business. Only time will tell whether his savage slimming and streamlining will do the trick.
