Tavares set to unleash PSA’s potential worldwide

Carlos Tavares believes it is important for PSA to build its future. “This company has a lot of potential and this is something I have been repeating and repeating since December 2015,” the Chairman of the French auto group told Business Line during a select media interaction at the Geneva Motor Show.

PSA has been firing on all cylinders lately and hit the headlines this week when news of its acquisition of Opel and Vauxhall brands from General Motors became official. While this will catapult the group to the second spot in Europe after Volkswagen, it has also been on overdrive in the ASEAN region where it is one of the bidders for Proton of Malaysia.

“We need to build the future and should be confident but not arrogant. As long as we can do things properly, we can grow well,” said Tavares. Better known as the manufacturer of the Peugeot and Citroen brands, PSA has made a remarkable recovery over the last four years when at one point it seemed that it was never going to climb out of the abyss it had plunged into.

This was the time GM was roped in as one of the lifelines and given a seven per cent equity stake in PSA. The fact that the reverse has now happened in the form of an Opel buyout pretty much reinforces the remarkable turnaround PSA has made.

Tavares had moved to PSA from Renault and quickly took over as Chairman from Philippe Varin. During the last few years, he has been pulling out all stops to ensure that the growth story continues without a pause. Of course, one of the critical allies in this revival script has been Dongfeng Motor of China, which has a 14 per cent stake in the company along with the French government.

“Dongfeng is one of our strategic partners and one of my shareholders. It is of course open for us to create opportunities and make things happen with them,” Tavares said. And probably, the Chinese automaker will be a part of the PSA’s Asean strategy where a critical first move has been made in the Proton buyout bid. “PSA group is bidding for Proton and keep in mind one of the shareholders is Dongfeng,” said Tavares, a broad hint of the road ahead.

It is also a remarkable coincidence that another Chinese company, Geely, is in the race for Proton. All this is an indication of how global dynamics are changing in the Asean region. Where GM and Ford have been busy cutting back operations in key countries such as Indonesia and Thailand and the Japanese rule the roost, Chinese companies such as SAIC, Dongfeng and Geely are now quickly filling up the gaps. While SAIC’s trusted ally in the West has been GM, it must be remembered that Geely bought out Volvo Cars some years ago.

Shifting lanes to India, where PSA recently announced that it was teaming up with the CK Birla group to use the latter’s Chennai facility, the other big surprise was the decision to acquire the Ambassador brand. Asked what was the rationale behind this move, Tavares laughingly told this writer, “I should take some lessons from you (on the Ambassador).”

On a more serious note, however, the PSA chief said ownership of the brand would perhaps translate into an opportunity in its India innings. “We have to eventually see if it makes sense to the Indian customer. The Ambassador is an iconic brand and warms the hearts of people in India. If there is an opportunity where it brings value to the eyes of customers, we have the brand and can use it,” explained Tavares.

It is still a million dollar question though if this connect can be made in a country where two-thirds of its population is under 30 years old. The Ambassador is iconic for sure but can hardly be termed synonymous with modernity. Perhaps PSA will consider a contemporary model with the Amby badge based on the premise that brands never die.

While stressing on the fact that it was important to be grounded and humble in a competitive market like India, Tavares said there was a lot to learn going forward where timing will be the key. For the moment, PSA has given itself another three years to get its India script in place where capacity planned by the end of 2020 is one lakh units.

By this time, the country will have reached a milestone as the third largest producer of cars globally. The year 2020 will also see another challenging goal in terms of meeting Bharat Stage VI emission norms. While BS IV will roll out nationwide next March, it is not going to be the easiest of tasks skipping the next level and jumping straight to BS VI. The auto industry will also see other legislative changes coming in for areas like safety and eventually, investments in technology and additional fitments will lead to higher vehicle price tags.

It is in this milieu that PSA will strive to make a mark in a country, which will be at par with Europe in emission standards. Yet, levels of affluence in this part of the world will still be dramatically different and it is here that the aggressive powertrain localisation programme planned with AVTEC will hold the French automaker in good stead. Beyond this will be the choice of model and the distribution network but, for now, Tavares will have reasons to feel optimistic about being in charge of a far more rejuvenated PSA.

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