India was familiar territory for Carlos Tavares when he was Chief Operating Officer of Renault. After all, it is an important market for the company and the future hub for its Asia-Pacific business.

China will, however, be top priority for Tavares today. His new employer, PSA Peugeot Citroen, has identified China as the biggest growth lever of the future, especially when Europe continues to hobble. The Chinese association will also become more profound with Dongfeng tipped to pick up a stake in PSA in the coming months.

Tavares will take over from Philippe Varin as CEO early next year. The PSA turnaround will be one of his biggest challenges, especially when it means having a Chinese ally on board to take the story forward. For a hardcore French company which has been struggling for a while now, the most pragmatic lifeline would be to rope in a strong partner like Dongfeng. Yet, it is a tricky transition which will have its share of public sentiment and something that Tavares will need to handle skilfully.

Difficult time The good part is that present CEO Varin has paved the way for PSA’s global strategy during his tenure over the past few years. It has been an extraordinarily difficult time, with Europe showing no signs of recovery and losses going through the roof. This is what prompted Varin and the top leadership team to reach out to General Motors and work together with the prime objective of setting right the Europe business.

Clearly, the pace of progress has not been on the desired lines and it is Dongfeng which will, perhaps, put PSA on the fast track, especially with China rapidly emerging as its most important global market. To that extent, Tavares will be comforted by the fact that a foundation is already in place though the real work starts now.

Going forward, China will be critical to Peugeot, getting 50 per cent of its business — beyond Europe — by 2015. This component has been steadily growing from 25 per cent in 2009 to 44 per cent this year. The other important global markets are Russia and Latin America but China is way ahead in terms of growth.

PSA has also got in place an aggressive platform strategy which is intended to keep costs in check while planning quick product development. There are 11 launches planned between 2014 and 2018 where, once again, China will be an important part of this plan. PSA will also have seven R&D centres spread across Europe, China and Latin America.

To think that the French automaker was keen on setting up base in India till two years ago but had to shelve its plans owing to the crisis in Europe.

India plans PSA was actually the first to enter this country in the early 1990s but exited in 1997. Its comeback in 2011 was again thwarted and it will be interesting to see if Tavares still keeps that option open for the future, perhaps with Dongfeng in tandem.

While at Renault, he had select interactions with the Indian media and reiterated that it was important to focus on a core model strategy. Manufacturing too many cars, according to him, will “fragment the energy and financial resources” of the company.

“We don’t need a bunch of cars in our portfolio,” he had said. Tavares also cautioned against basking in the success of the Duster, saying that it is important to extend “this good work” over the next decade. All this pretty much reflects the mindset of the new PSA boss whose hands will be full for a large part of this decade.

> murali.gopalan@thehindu.co.in

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