CEO AND CHAIRMAN, GROUPE PSA
INTERVIEW Carlos Tavares, CEO and Chairman, Groupe PSA
Carlos Tavares is good at shaking up the auto world. He left the No. 2 spot at Nissan Renault to become CEO of Groupe PSA in 2014, taking the Peugeot, Citroën, and nascent DS brands from near death to a 7.3 percent profit margin with no debt. Then he bought the ailing Opel and Vauxhall brands from GM with plans to make them profitable in four years. He expects the larger PSA to grab 17 percent market share in Europe. Once that’s accomplished, Tavares plans an expansion into the U.S.
What can you do with Opel that General Motors could not? Everything I see at Opel is exactly the same thing as what we had at PSA four years ago. When you look at the numbers, it’s striking. The manufacturing costs of the U.K. plants is double the manufacturing costs of the French plants. We gave our Opel teams the benchmarks, line by line, function by function. They say, “OK, if the French guys did that, we can do it.” We also moved the decision center not from Detroit to Paris but from Detroit to [Opel’s base in] Rüsselsheim, [Germany]. We are giving these people breathing room to control their destiny by coming up with ideas to improve the profitability of their company themselves.
At what point can GM no longer use Opel platforms and manufacturing?
It will need a few years because there are stringent CO2 objectives in Europe in 2020 we have to meet, and we have a strong technology and product plan for Opel that we are now implementing. It’s going to happen with the end of each generation of products. It will be staged over three or four years. How do you establish a brand in the U.S? The No. 1 priority is to understand the U.S. consumer, which I know from my Nissan days. But my people don’t. We need to get them up to speed to understand what is going on and how people react here. That’s the goal of the first two phases with the mobility service approach (a car-sharing service using competitive cars first, followed by PSA models) to get more feedback on features and performance, on what they like and dislike. The third leg is deciding what technology, products, brand, and most efficient distribution model to bring to the country at that point in time. That’s an important driver because this is a 10-year plan. What U.S. cities will be first to offer cars using the Free2move car-sharing global app for phase one? There are several projects under preparation, but there should be a big East Coast city very soon. We’ll announce it in a few months.
The No. 1 priority is to understand the U.S. consumer, which I know from my Nissan days. But my people don’t.”
On establishing a brand in the U.S.
When will you start selling your own products in the U.S.? Will it be a luxury or mass-market brand? It’s not decided yet.
What do your brands offer the U.S. that isn’t already here? We have a high level of market share in many other markets in the world and the competitors are mostly the same, so why couldn’t we make U.S. consumers happy? Our engineering teams are using Rüsselsheim engineers to make our next generation of products U.s.-compliant. That work started a few months ago (fall 2017) and is being boosted by using engineers who have been working for GM for so many years.
You plan to electrify the whole lineup in 2025. Other automakers have targeted 2019, 2020, and 2021. Why so late?
We start in 2019, and from there it ramps up. I think it’s 50 percent by 2020 or 2021, and then it ramps up to 100 percent. It combines pure EVS and [plug-in hybrid EVS]. The platform is engineered to use the same assembly line to make petrol-powered, diesel-powered, Ev-powered, and Phev-powered cars.
How can you afford these technologies given your scale? Our R&D and capital expenses are around 8 percent. We are investing heavily in electrification and autonomous vehicles. We are launching the new DS 7 Crossback, which is the first car of a second generation of our premium DS brand with Level 2 Automated Driving systems, and we are also investing heavily in connectivity and mobility services.
What is your ramp up to autonomous vehicles? Level 1 was on sale with the Peugeot 3008 last year. Level 2 is the DS 7 Crossback. Level 3 will be around 2020, 2021. And Level 4 around 2022, 2023. n
NOT THAT AUTONOMOUS This DS 7 Crossback with French Prime Minister Emmanuel Macron popping out of the sunroof has Level 2 autonomy, so someone is still in the driver’s seat.