Philippe Varin is planning to step down next year as chief executive of French carmaker PSA/Peugeot-Citroen, two people privy with the matter told Bloomberg, adding that the CEO is eyeing former Renault Chief Operating Officer Carlos Tavares to replace him.
According to the sources, Varin wants Tavares to initially become his main lieutenant while he concentrates on discussions with Chinese carmaker Dongfeng Motor Group to expand an existing partnership. Varin has been leading talks with partner Dongfeng Motor Group to expand a joint venture through a multi-billion-euro capital increase. A deal would see the Chinese carmaker and the French state getting a 20 percent stake in PSA.
One of the sources told Bloomberg that Varin has yet to sign a contract and that the approval of PSA’s board is needed to formalize the agreement. The search for Varin’s successor comes as PSA seeks to partner with Dongfeng or another carmaker to cut its dependence on Europe, where it sells over 50 percent of its offerings. PSA posted EUR510 million ($690 million) in operating losses in the first half of 2013.
Peugeot is seeking a capital hike of at least EUR3 billion, which Dongfeng and France would acquire equal holdings of around 20 percent, people familiar with the matter said in October. Varin told German daily Die Welt in an interview that it would "make sense to deepen the partnership" with Dongfeng. "First you have to find the right industrial projects, then you worry about the necessary financing,” Varin told Die Welt, referring to the reported plans for Dongfeng to acquire stake in a capital hike. “You shouldn't put the proverbial cart before the horse."
That plan, however, suffered some hiccups as Dongfeng is asking for a smaller stake than first discussed at 10 percent, people familiar with the matter told Bloomberg last week. Sources said that Dongfeng is more interested in expanding an existing industrial partnership than purchasing a stake in PSA.
Varin's stay in PSA has been solid after the company posted better-than-expected results in the first half of 2013, allowing the French carmaker to inch closer to the CEO's goal of breaking even by 2015. His plans to step down next year would effectively cut short his contract as CEO, which was renewed in May for another four years. Varin just turned 61 and will be 65 in four years.
Gregoire Olivier -- chief of PSA/Peugeot-Citroen's operations in China and Russia – has been tagged as the front-runner to succeed Varin. Already a member of PSA's management board since 2007, Olivier has his contract renewed in April for four years.