PSA/Peugeot-Citroen CEO Carlos Tavares’s new global management structure for the struggling automaker is very much like the one he left behind at Renault when he was Carlos Ghosn's No. 2.
Tavares has appointed six regional directors to help ensure that PSA is profitable in all its regions. When he presented his Back in the Race turnaround plan for PSA in April, Tavares questioned why the automaker loses money in Russia and Latin America while competitors earn profits there.
The new structure echoes Renault’s example by having a single member responsible for individual regions. "Renault’s management structure has become PSA’s management structure,” Gaetan Toulemonde, an analyst for Deutsche Bank, said. “They are the same.”
Among the changes was the creation of a new post of operational director for Europe, PSA’s largest market, which will be filled by the automaker's personnel chief, Denis Martin.
A key result of the structure is that a single person who reports directly to Tavares must answer for PSA’s profits as well at its losses as an executive committee member responsible for a particular region.
"That fact that one person is accountable for the different regions means that they are responsible for everything, including P&Ls, revenues, unit sales, etc.,” Toulemonde said. “I doubt if the boss will accept $100 million a year losses in a particular region,” Toulemonde said.
As he did at Renault, Tavares is pushing to change PSA’s culture to become one more driven by profit. He is taking measures so that PSA will close the pricing gap with Volkswagen, which was one of his missions while at Renault. “This strategy is obviously beneficial since if Renault’s pricing strategy was bad, then Tavares wouldn’t have brought it to PSA,” Toulemonde said.
Renault in many ways does not represent a success story for PSA to follow, as it suffers from many of the same structural problems as PSA, such as overcapacity in France. Renault also only achieved sales of 2.63 million units last year, missing its target of 3 million units. Without taking Nissan’s contribution to profits into account, Renault remained in the red last year.