Christian Streiff has been in and around Peugeot Citroen for 100 days. He swapped his research clipboard for executive chairman’s tie last Thursday – the day he was formally confirmed by the Peugeot family as the chosen one. He delivered the PSA financial results to investors and journalists in London and Paris. Then he went back into research mode.
The man from Airbus who succeeds the highly regarded Jean-Martin Folz, has started with a flourish. He has completely restructured the executive, bravely de-emphasised Robert Peugeot, broken down the walls between Peugeot and Citroen, and between development and manufacturing, sent his finance director off to run the parts business, Faurecia (‘find out whether we should sell it Yann’) and swapped him for a lady who has been lurking amongst the company’s finances in increasingly senior positions for 30 years.
Streiff doesn’t pretend to have all the answers yet. But he has a few: quality needs to improve, costs need to reduce, new products need to come out faster and they need to be in the growth segments. The organisation has to be slicker. Ho-hum. Seen all that before. But he also spotted the buried treasure: in making small cars in the Czech Republic with Toyota as joint venturer, he has the gift of an internal laboratory which tells him about best practice for manufacture and quality.
For the answers he hasn’t got – and he cheerfully accepts that there are many, he has created 10 teams of 10 people to produce the answers. They have 100 days to deliver. Streiff then takes another 100 days and outlines the cunning plan in September. His method could vaguely be described as binary. Principal amongst the deliberations must be this: why is PSA losing market share in Europe and how can that be stopped? Since 2002, all the growth in the group has been in Eastern Europe (mainly the Toyota JV), the Far East (mainly assembly in China) and a similar job in South America.
Despite all that success, the European decline was a crucial offset: after making 3,115,500 cars and selling them for EUR44.5bn, the car business made pretty close to nothing.
The Peugeot family quite likes hiring Frenchmen who know nothing about the car industry. Jean-Martin Folz was from the same mould and his objectivity worked very well for him for his first five years. Once it was clear that he had to make a sharp turn in direction that was maybe a challenge too far.
What will be fun to watch is the rivalry between Streiff (pronounced to rhyme with ref) and the other turnaround legend at Renault. Or maybe Carlos Ghosn isn’t a legend any more? The two worst losses of market share from the majors in Europe last year were Renault and uuhm Nissan. Is there not some connection there?
Renault declared its results yesterday the day after PSA. It has made a very brave forecast that it would deliver 2.5% operating margins and it did. But there was a whiff of smoke and the flash of a mirror in those numbers according to UBS research: if you disregard the capitalised research and development and then add back the reduction of warranty provision the margin in the auto division was close to…nothing.
Mr Turnaround Ghosn may have struggled to get his numbers up. He had a margin forecast to protect. Turnaround Streiff would have been cool about poor numbers. It helps people recognise that there is work to be done. This year then, PSA has the easier shot at bringing in a performance improvement.
And what is behind the likely profit performance in both cases? The answer is that they both have some really, really good new cars coming this year.
But don’t they sell against each other? Oh yeah.