Peugeot rallies

CARLOS TAVARES, appointed to run PSA Group two years ago after a bail-out by China’s Dongfeng Motor and the French government, once claimed that he would rather have pursued a career as a racing driver than as a businessman. Motorsport is a pastime he still pursues, and his racing mentality has seemingly rubbed off on the car company he now steers. PSA Group, the parent firm of Peugeot and Citroën, which was loss-making and on the brink of bankruptcy two years ago, has made a surprisingly rapid recovery.

Cost cutting and streamlining manufacturing have boosted profits, revenues and margins. After averaging around 1% for more than a decade, profit margins before interest and taxes reached 5% in 2015 and 6.8% in the first half of 2016. In the ruthlessly competitive mass market, those are outstanding numbers. PSA’s recent five-year plan, “Push to pass” (named after an engine-boost button that aids overtaking), envisages margins of 6% by 2021, and revenue growth that will outstrip years of slow expansion. This now appears unambitious.

Mr Tavares regards too much time spent in head office away from the factory floor as “poison”,…Continue reading

This post was originally published in the Economist.

Peugeot rallies

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