An appearance at the Geneva auto show on Tuesday marks Tavares's
graduation from former Renault second-in-command and Carlos Ghosn
protégé to Peugeot CEO — and Ghosn rival.
Under Brazilian-born Ghosn, who heads the Renault-Nissan alliance,
Tavares helped to steer the French side of the partnership unscathed
through a deep European slump that almost sank Peugeot.
While Renault was sheltered by its 43.4 percent Nissan <7201.T>
stake and buoyant low-cost car sales, analysts also credit price
increases and cost savings that Tavares pushed through and now wants
to repeat at Peugeot.
"The fact that I see a certain number of contrasts with my previous
experience gives us the ability to (identify) room for improvement,"
the new Peugeot CEO said on Monday during a panel interview
organized by French trade publication 7pm Auto.
Peugeot last month unveiled another multibillion-euro loss for 2013,
along with a 3 billion euro ($4.1 billion) rescue deal that will see
Chinese partner Dongfeng <0489.HK> and the French government take
significant stakes in the carmaker.
Tavares, 55, rose rapidly through the Renault-Nissan ranks as Ghosn
handed him three promotions in four years, culminating in his 2011
appointment as Renault chief operating officer.
"They're both excellent individuals," said Andy Palmer, Nissan
executive vice president and chief planning officer. "One of the
advantages Carlos Tavares does have is that he's been brought up
through the Nissan system."
The Carlos-Carlos working relationship was strained when Tavares, a
Portuguese national, said in an August interview he was looking to
move to Ford <F.N> or General Motors <GM.N> because his CEO
ambitions could not be satisfied at Renault.
Tavares will not comment on the discussions that led to his exit two
weeks later. "Every story needs a mystery, and you'll need to learn
to live with that one," he said on Monday.
But former colleagues say he was forced out after refusing Ghosn's
suggestion that he apologize to staff for the gaffe.
"Ghosn gave him an out and an opportunity to stay, but he didn't
take it," according to a company insider, who said Peugeot
representatives contacted Tavares soon after that.
As a result, both French carmakers are now run by CEOs called Carlos
who were raised in Portuguese-speaking environments. Both went on to
graduate from French Grandes Ecoles and — perhaps less surprisingly — both like fast cars.
Ghosn, who turns 60 this month, drives a Nissan GTR, while Tavares
races competitively. Few doubt that Carlos the younger would beat
Ghosn around the Nuerburgring, and probably has.
"Lap times weren't recorded," the same insider said of the two
executives' past sorties on the legendary German track.
Ghosn recently laughed off suggestions that he had been wounded by
the departure of Tavares and that his former lieutenant's inside
knowledge might now pose a threat.
"If you're easily bruised, then you shouldn't be a car boss," Ghosn
said on LCI television. "Knowledge is important in the industry but
it's only 5 percent of the battle. It's knowing what to do with it
that really counts."
In his first interview since taking operational command at Peugeot
last month, Tavares set out his priorities: improved pricing power,
a simplified model lineup, Nissan-style "Kaizen" production savings
and a Renault-inspired push to increase the use of local suppliers
in emerging markets.
By parachuting in to save a distressed company, Tavares is following
in the footsteps of Ghosn, sent to Japan by then Renault CEO Louis
Schweitzer to rescue Nissan in 1999.
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Whereas the Japanese carmaker had been bled dry by investment
overstretch, former alliance executive Alain Dassas said, Peugeot's
predicament resulted from issues such as a prolonged failure to find
the right international partners.
"The cash problems are similar, but the reasons behind them are not
the same," said Dassas, who served as chief financial officer for
Renault and Nissan. "Hiring Carlos Tavares is one of the best things
PSA could have done to turn itself around."
Peugeot lost 1.35 billion euros at the operating level in 2013,
while Renault's profit rose 58 percent to 1.24 billion, helped by
price increases and cost cuts.
New model launches at higher sticker prices were followed by panic
among sales directors when the initial orders surge waned during the
tail-end of the European slump, according to a source close to
"They said we must discount or sink," the source said. "But Tavares
said no, we've raised prices and we're sticking to it. Sure enough,
sales stabilized and he'd beaten the rebellion."
Another thing Tavares and Ghosn now have in common is the close
supervision of the French government as a large and boisterous
stakeholder in both manufacturers.
Already Renault's biggest shareholder with a 15 percent holding,
France is buying 14 percent of Peugeot, matching the stakes to be
held by its founding family and Dongfeng.
Politicians like Industry Minister Arnaud Montebourg may expect the
two national champions to pool more resources, after investing 800
million euros of taxpayers' funds in Peugeot.
"It's interesting to observe the national mobilization around PSA,"
Montebourg replied indirectly last week to a question about
potential cooperation between the carmakers.
"The French people have effectively become co-owners of PSA and are
bound to consider that it belongs partly to them."
Some Renault managers are wary that the company could be pressured
to share more with its struggling French peer than it would like. An
early test may be self-driving vehicles, where Ghosn is already
leading a government-backed research push.
"The natural play would be to have both your French car companies
involved," said a serving Renault-Nissan executive who knows both
CEOs. "So let's see where that goes."
Renault and Peugeot already cooperate fruitfully on early-stage
engineering projects through France's government-assisted PFA
industry body, Tavares said.
"If, to accelerate the PSA turnaround, there are opportunities to
collaborate then of course we should address them," the new CEO
"Carlos Ghosn and myself are professional people — it's in the
interest of both our companies that we get along properly."
($1 = 0.7240 euros)
(Additional reporting by Andy Callus and
Gilles Guillaume; Editing by Mark Potter)
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