PSA/Peugeot-Citroen has named Carlos Tavares as its next chief executive. In effect, Tavares, former COO of Renault, will join the team of CEO Philippe Varin on January 1, 2014, with plans to take in the reins later in the year, PSA said in a statement. Erich Hauser, an analyst with International Strategy & Investment, told Reuters that the appointment of a new CEO signals that PSA and the Peugeot family are willing “to make far-reaching changes, adding that they consider Tavares to “be a strong hire."
Varin is leading discussions with Chinese partner Dongfeng Motor Group to expand an existing joint venture through a multi-billion-euro capital increase, in which the carmaker and the French state would get a 20 percent stake in PSA. The move also effectively cuts short Varin’s contract as CEO, which was renewed in May for another four years.
According to Reuters’ sources, the succession is designed to address concerns by Dongfeng over management quality and continuity as it considers making investments in an expanded alliance.
PSA Chairman Thierry Peugeot remarked in the statement that Tavares’ appointment will allow the carmaker to pursue its "strategy of recovery and development." Due to the economic slump, PSA has been struggling and is cutting jobs as well as production capacity in order to stop its financial bleeding within two years.
Even then, PSA will lack the financial pull and industrial scale to compete globally on its own. Varin has admitted that PSA will require new partners and fresh capital to support future vehicle and technology investments. Varin’s support for the deepening alliance with General Motors or Dongfeng has resulted to tensions with members of the founding Peugeot family, which could be bound to lose control of the carmaker in the capital increase.