BRUCE GAIN

PSA's new brand boss faces cost-cutting challenge

Bruce Gain is an Automotive News Europe correspondent in France.Bruce Gain is an Automotive News Europe correspondent in France.
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PSA/Peugeot-Citroen's appointment of its Chief Financial Officer Frederic Saint-Geours to replace Jean-Marc Gales as head of brands may help the automaker to more aggressively realize its cost-cutting goals.

Saint-Geours is known as more of an operations man than Gales, who is quitting PSA to head the European suppliers association CLEPA.

Gales has wide experience as a senior marketing executive with BMW, Mercedes, and Opel as well as playing a strong role in PSA's expansion into China and Brazil. PSA believes what is needed now is someone who can more effectively slash costs in Europe.

PSA CEO Philippe Varin used the term "rigueur financiere" to describe Saint-Geours management style. Interestingly enough, the French government has been propagandizing its austerity measures as a "rigueur" plan, which resonates with fiscal discipline.

Similar to the French government's plan, Saint-Geours' "rigueur financiere" will inevitably involve the politically sensitive process of cutting production in France and Europe, a move that financial analysts say is necessary for profitability at PSA, which warned last month that the core automotive division would likely post a loss for 2011.

Eric Hauser, an analyst at Credit Suisse, says PSA's international expansion is necessary but the "game changer" will be to institute changes in the company's cost-base in France and Europe.

Saint-Geours, 61, is a 25-year veteran of PSA and was a long-serving head of the Peugeot brand.

He is also a product of France's Ecole Nationale d'Administration elite school system. Members of this group often shift between high-level government and private-sector leadership roles.

Saint-Geours' political connections will be a help as PSA seeks to cut 6,000 jobs and possibly close its Aulnay plant near Paris to reduce costs to help it weather a tougher European market.

You can reach Bruce Gain at bgain@crain.com.

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