BRUCE GAIN

Tavares gets his wish

Bruce Gain is an Automotive News Europe correspondent in France.Bruce Gain is an Automotive News Europe correspondent in France.
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Carlos Tavares said this summer that he wanted to be CEO of a global automaker. His wish has been granted. The man who three months ago made it clear he was no longer satisfied as Carlos Ghosn's No. 2 at Renault will become his former boss' rival in Europe.

The reaction has been positive to Tavares being picked to replace Philippe Varin as PSA/Peugeot-Citroen CEO, a move that will officially take place sometime in 2014.

"Is Tavares the right man for the job? The answer is 'yes'," Gaetan Toulemonde, an analyst for Deutsche Bank, told Automotive News Europe. "Is the news positive for PSA? Certainly."

Shareholders in the automaker, particular the controlling Peugeot family, already were grumbling about Varin's performance last year, according to French media. But replacing him while PSA was in the middle of building a new alliance with General Motors and while working to sell off more than a billion euros in assets was not a viable alternative in 2012.

Varin will remain at PSA to try to secure its finances through another stake sale, likely to the automaker's Chinese joint venture partner, Dongfeng Motor, and the French government.

After a deal is done, Tavares will have the freedom to focus on the automaker's struggling auto operations, which are expected to lose 1.5 billion euros this year.

The Portuguese native will apply his experience heading Nissan's North and South American operations and managing Renault's presence worldwide. This expertise will play a crucial role as PSA leverages its alliance with Dongfeng in China, which PSA hopes will eventually become its single-largest market outside of France. He will also be tasked with completing PSA's long-term mission of relying less on troubled Europe, where it sells the majority of its cars.

More specifically, Tavares will be counted on to reduce PSA's costs, which he successfully did during his tenures at both Nissan and Renault. For example, PSA's production cost per car is higher than that of Renault. Tavares has the capacity to correct this.

"Tavares was able to get Nissan's price mix effect under control and is very priced-disciplined," Toulemonde told Automotive News Europe. "Getting PSA's pricing in order should have a very positive effect on its bottom line."

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

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