PARIS -- PSA Group rebounded from a near-death experience in the early 2010s to become Europe’s most profitable automaker through a meticulous focus on efficiency, but CEO Carlos Tavares said the coronavirus crisis has revealed even more potential savings.
PSA convened regular “Kill the Virus” crisis meetings of the executive committee that sought ways to mitigate the impact, Tavares said at PSA's first half results webcast this week. PSA was able to achieve a positive operating margin in the first half, even as rivals such as Volkswagen Group and Renault reported deep losses.
"We discovered that you can still find a lot of things that are not at the right level of efficiency and effectiveness," Tavares said. "Many, many things."
PSA's head of European operations Maxime Picat said the crisis forced PSA to look at areas that had been taken for granted.
"Sometimes when we were in the middle of the [coronavirus] storm, it was like we were in slow motion," Picat said during an Automotive News Europe Congress Conversation webcast on July 30. "Nothing was happening on the cash-in side, and the cash out was still happening."
"It was an opportunity to really look at the business model and ask: 'Why do we do that'?" Picat said. "Even after years and years of trying to streamline the company we found more opportunities."
A key metric for PSA has been lowering the automaker's breakeven point -- the production figure at which operating margin becomes positive. Picat said the focus on that figure since Tavares took over in early 2014 paid off in the first half.
"When we reported every half year that we were improving our breakeven point, we were just preparing, in fact, for this kind of crisis," he said, as PSA still made money with sales down by 46 percent worldwide to 1.03 million in the first half.
One of the changes necessitated by stay-at-home orders, increased remote working, will become the norm throughout PSA, Tavares and Picat said.
This will allow PSA to eliminate 1 million square meters of real estate, and also allow it to save 29,000 tons of CO2 in its carbon footprint, he said.
The automaker is in the process of moving its headquarters from leased space in the western Paris suburb of Rueil-Malmaison to its technical center at Velizy, also west of the city.
The new workspaces will be 90 percent meeting rooms or open space, and just 10 percent desks, said PSA’s Europe chief Picat.
"Honestly, after months of very efficient remote work, where the company was efficient and delivering results, we couldn't act like nothing had happened and go back to the way we worked before," Picat said.