Incoming PSA/Peugeot-Citroen CEO Carlos Tavares wants profitability to be the key priority for the ailing French automaker.
The former Renault chief operating officer, who joined PSA in January, is happy with the quality of executives he found at his new company, but not with their profit culture.
"Making money was not the core value here," Tavares said at the Geneva auto show.
Tavares's operational priorities at PSA are similar to those he had at Renault. They are:
- Increasing operating profit by "selling our cars at the right price." That means reducing the level of discounts.
- Reducing production costs by working more efficiently with suppliers.
- Better investment control by developing new models only where there will be an adequate return and by not seeking to cover every segment even if it is unprofitable.
- Reducing working capital, mostly by streamlining inventories, which Tavares found at a higher level than he had previously experienced.
Cutting PSA's cash bleed by 2016 at the latest – but if possible by 2015 – is top of Tavares's to-do list. "If you do not stop the cash burn, you increase your debt and your financial charges, reducing the amount of money you can spend to develop and market your products," he said.