PSA Group CEO Carlos Tavares is a firm believer in under promising and over delivering. This became evident after he took charge at struggling PSA in 2014. His Back in the Race five-year plan gave his team targets that Tavares considered challenging, while many people outside the company said they were much too conservative. PSA easily surpassed those goals in two years. That left Tavares with an enviable problem: He needed to give his team new objectives. PSA's Push to Pass strategy announced last month tripled the automaker's profit target to 6 percent, but that goal also appeared underwhelming to many given that PSA posted a 5 percent margin in 2015. Tavares discussed the new plan with Automotive News Europe Editor Luca Ciferri.
Your Push to Pass plan is the second strategy you have announced at PSA Group that excludes a sales volume target. Why?
Because I am consistent and volume can be the enemy of value. For us growth is not measured just by volume. It is measured by revenue, by operating margin and by market and product coverage. This industry has made many, many mistakes in recent years by always pushing volume. There is a point at which pushing volume can destroy value. At the end of the day, growth is not the goal, it is the reward of a job well done. To me, performance matters more than size.
So what is Push to Pass about?
Profitable growth based on the operational excellence achieved with the Back in the Race plan. We aim to become the most efficient carmaker in the world. The new plan is our lever.
Are you concerned that financial analysts are unimpressed with your 4 percent operating margin target for 2016-2018, especially after PSA had a 5 percent margin last year?
First of all, we have committed to never going below a 4 percent sustainability "floor" in the coming three years. This is four times the average 1 percent margin that the company had delivered in the last 15 years. Secondly, the 2021 target is 6 percent. I would also like to mention that in 2015 we benefited from [raw materials and currency] tailwinds, which contributed about one-third of the operating result.