Pierre Peugeot, the great grand nephew of PSA founder Armand Peugeot, has been a quiet, but active participant in the family's car company for many years.
As vice chairman of Peugeot SA's management board from 1972 to 1998, he was a key figure in the takeovers of Citroen and Chrysler Europe.
Since 1998, he has been chairman of the supervisory board, succeeding his cousin Roland.
Sixty-seven year old Peugeot has not given a newspaper interview for several years. But he recently decided to speak to Automotive News Europe about his career.
He was interviewed at PSA headquarters in Paris by Automotive News Europe's Stephane Farhi.
Peugeot's family values
I was born 500 meters from a plant in Valentigney (Doubs, eastern France) that belonged to Peugeot et Compagnie, a conglomerate that made steel, mechanical and electric tools, pepper shakers, et cetera.
During World War II, my father, who was chairman of Peugeot et Compagnie (now Faurecia), used to take me to watch the rolling mills in the evening. As there was not much work to do because of the war, the plant was making steel for shaving blades. It was very impressive for an eight-year-old.
So I dived into industry when I was very young. When I joined the PSA management board later, I supervised the non-automotive business. I worked a lot to create what became Ecia, and now Faurecia. One day I went and saw my father and I told him I wished to work within the automotive company.
My career start was untypical. Because of health problems, I had to stop studying while I was preparing to enter engineering school. It was a tradition in the family to attend Ecole Centrale de Paris, a school well-known to train engineers with a practical mind.
Then I joined the army and spent a year in Algeria. I was a second lieutenant in the cavalry in command of 30 infantrymen, so I learned how to manage people and evaluate them.
I joined Automobiles Peugeot in 1957. Following tradition, all future executives used to start in the factory in Sochaux. So I spent six months as a worker in the stamping shop. Later I worked as a team leader within a shop that made mechanical parts. Then I joined the manufacturing engineering department.
First executive job
I went to Peugeot headquarters in Paris in 1960. Maurice Jordan, who was then Peugeot general manager, sent me to different departments during the first six months. I joined the export division in 1961. I spent a year in New York, with Peugeot USA, but I went around the country visiting Detroit and the GM research center. I really made the most of my stay in America.
However, times were tough. Peugeot had started to sell the 403 in the USA in 1957. In the beginning, it was a great success, with about 17,500 sales in 1959, when annual global sales were around 200,000 units. Renault was then our distributor in the USA. But sales became erratic because we did not design a specific car for the US market; we had simply adapted an existing model.
There were problems with body corrosion and starting (because of cold temperatures in the north and northeast). Despite all this, Peugeot actually had a good reputation.
However, a strategic issue arose. The top management did not want to take the risk of launching a major US strategy, with one specific product. Even though the US market was huge, it was only 10 years since Peugeot had recovered from the depression caused by World War II, and at that time the company only had a single plant at Sochaux. The top managers, who were cautious people, considered it too risky to bet a high stake on the US market. Consequently, we slowed down and eventually struggled along until Peugeot left the USA.
Today, I regret that we are not in the USA, because it's the No. 1 car market in the world. I hope it won't be an everlasting regret. It would not be really worth us being there to sell only 10,000 cars a year. But I think that if we had dared to play the US card, as for instance Volvo did, we could have succeeded.
Return from the USA
I took charge of export sales in Europe and then I worked with Paul Perrin, Peugeot's chief financial officer, and Yves Rapilly, who later became chief financial officer. I was involved with dealer financing.
In the 1960s, we wanted to develop exports, but we were not able to do much because of production capacity problems. The French market was the top priority, and exports were only secondary so there was a shortage of cars for foreign subsidiaries. Of course we could have built our second plant at Mulhouse sooner than we did, but there was resistance inside Peugeot.
From the very beginning it was decided to have one basic model with the least possible diversification, so setting up a second plant was viewed as a considerable risk.
Peugeot's growth strategy
When I joined the company's top management in 1967, Peugeot was in the process of a growth strategy. A few years earlier, in 1962, we had started talks with Citroen in order to do things together.
It did not work out. So in 1966, we signed an agreement with Renault, which proved to be very successful. We did a lot of things with Renault, such as creating a common engine subsidiary, la Francaise de Mecanique.
Then the first oil crisis occurred and Michelin (Citroen's main shareholder) resumed contact with us. It was Francois Michelin's personal decision. We took over Citroen in 1974 and because we had already created a holding company, PSA, to control our different subsidiaries, Citroen was integrated into the group without being merged with Peugeot.
Ambitious new approach
Peugeot reversed its cautious policy and adopted a growth strategy in the 1970s with the purchase of Citroen in 1974 and Chrysler Europe in 1978.
The watershed came with the launch of the 204 in 1965. We realized we could not continue with a one model-one plant strategy. So the two-model strategy was adopted and the Mulhouse plant was built.
Then came the opportunity to purchase Citroen and we realized that the automotive industry was starting to diversify. Peugeot could diversify by itself. But it did not have many plants: Sochaux and Mulhouse for car assembly, Lille for engines, and Dijon for transmissions. A takeover was a way to broaden the model range and to strengthen our design and engineering capabilities. We gained time.
Chrysler Europe purchase
Two companies went up for sale almost simultaneously, Chrysler Europe and American Motors Corp. I personally urged the company to purchase AMC. It was a high risk because PSA was not an internationally-minded group at that time. Considering Peugeot's position in Africa and South America then, I thought it would good to have a strong 4x4 vehicle division. So Jeep interested us.
We finally chose to take over Chrysler's European subsidiaries, which belonged to our 'natural' ground, and we stopped talks with AMC.
Renault immediately rushed in when it discovered we were studying AMC. If we had been bolder and more internationally-minded at that time, we could even have taken over (all of) Chrysler.
What went wrong
I think we made a mistake when we changed Chrysler's brand names. We considered the right thing to do was to relaunch Chrysler under a single brand name, Talbot. We were wrong. Then the second oil crisis happened and we had to restructure.
It was a serious crisis which threatened the company, but I have no regrets (about acquiring Chrysler Europe) because it strengthened our position in the UK and Spain. Of course, it cost a lot of money. We merged Peugeot and Talbot in order to survive, not to erase one brand.
What happened with Talbot put a brake on any possible mergers for a while because we knew what could happen. We now look twice before doing anything, but it did not put a brake on our will to expand. Restoring the group's equity was the huge achievement of the 1980s. It was Mr. Calvet's work, because he was trusted by banks and he was a remarkable manager.
At the same time, we had to complete a broad re-engineering of PSA. It has taken a long time to make people understand they belonged to PSA group, not to Peugeot, Citroen or Talbot, which was the way they used to think 20 years ago. People inside the group's subsidiaries were resisting.
We also paid great attention to maintaining Citroen and Peugeot as distinctive brands in order to not lose their respective customers.
In order for a company to work well, it needs to not have any problem with control of its capital. I do not believe in monopoly. I believe in continuity because the car industry needs a long-term approach. I think that Michelin and Ford (families) have the same philosophy.
This belief pushed me to set up PSA's structure based on a supervisory board and a management board presently led by Jean-Martin Folz.
Thanks to this system, you can have the best managers and simultaneously the strongest control of the company.
As far as I am able to do it, I will make sure that a Peugeot remains chairman of the supervisory board.