| PARIS, March 3
PARIS, March 3 Whatever the secret of French
carmaker Renault's crisis-defying performance, Carlos
Tavares has taken it with him to domestic competitor PSA Peugeot
An appearance at the Geneva auto show on Tuesday marks
Tavares's graduation from former Renault second-in-command and
Carlos Ghosn protégé to Peugeot CEO - and Ghosn rival.
Under Brazilian-born Ghosn, who heads the Renault-Nissan
alliance, Tavares helped to steer the French side of the
partnership unscathed through a deep European slump that almost
While Renault was sheltered by its 43.4 percent Nissan
stake and buoyant low-cost car sales, analysts also
credit price increases and cost savings that Tavares pushed
through and now wants to repeat at Peugeot.
"The fact that I see a certain number of contrasts with my
previous experience gives us the ability to (identify) room for
improvement," the new Peugeot CEO said on Monday during a panel
interview organised by French trade publication 7pm Auto.
Peugeot last month unveiled another multibillion-euro loss
for 2013, along with a 3 billion euro ($4.1 billion) rescue deal
that will see Chinese partner Dongfeng and the French
government take significant stakes in the carmaker.
Tavares, 55, rose rapidly through the Renault-Nissan ranks
as Ghosn handed him three promotions in four years, culminating
in his 2011 appointment as Renault chief operating officer.
"They're both excellent individuals," said Andy Palmer,
Nissan executive vice president and chief planning officer. "One
of the advantages Carlos Tavares does have is that he's been
brought up through the Nissan system."
The Carlos-Carlos working relationship was strained when
Tavares, a Portuguese national, said in an August interview he
was looking to move to Ford or General Motors
because his CEO ambitions could not be satisfied at Renault.
Tavares will not comment on the discussions that led to his
exit two weeks later. "Every story needs a mystery, and you'll
need to learn to live with that one," he said on Monday.
But former colleagues say he was forced out after refusing
Ghosn's suggestion that he apologise to staff for the gaffe.
"Ghosn gave him an out and an opportunity to stay, but he
didn't take it," according to a company insider, who said
Peugeot representatives contacted Tavares soon after that.
As a result, both French carmakers are now run by CEOs
called Carlos who were raised in Portuguese-speaking
environments. Both went on to graduate from French Grandes
Ecoles and - perhaps less surprisingly - both like fast cars.
Ghosn, who turns 60 this month, drives a Nissan GTR, while
Tavares races competitively. Few doubt that Carlos the younger
would beat Ghosn around the Nuerburgring, and probably has.
"Lap times weren't recorded," the same insider said of the
two executives' past sorties on the legendary German track.
Ghosn recently laughed off suggestions that he had been
wounded by the departure of Tavares and that his former
lieutenant's inside knowledge might now pose a threat.
"If you're easily bruised then you shouldn't be a car boss,"
Ghosn said on LCI television. "Knowledge is important in the
industry but it's only 5 percent of the battle. It's knowing
what to do with it that really counts."
In his first interview since taking operational command at
Peugeot last month, Tavares set out his priorities: improved
pricing power, a simplified model lineup, Nissan-style "Kaizen"
production savings and a Renault-inspired push to increase the
use of local suppliers in emerging markets.
By parachuting in to save a distressed company, Tavares is
following in the footsteps of Ghosn, sent to Japan by then
Renault CEO Louis Schweitzer to rescue Nissan in 1999.
Whereas the Japanese carmaker had been bled dry by
investment overstretch, former alliance executive Alain Dassas
said, Peugeot's predicament resulted from issues such as a
prolonged failure to find the right international partners.
"The cash problems are similar, but the reasons behind them
are not the same," said Dassas, who served as chief financial
officer for Renault and Nissan. "Hiring Carlos Tavares is one of
the best things PSA could have done to turn itself around."
Peugeot lost 1.35 billion euros at the operating level in
2013, while Renault's profit rose 58 percent to 1.24 billion,
helped by price increases and cost cuts.
New model launches at higher sticker prices were followed by
panic among sales directors when the initial orders surge waned
during the tail-end of the European slump, according to a source
close to Renault.
"They said we must discount or sink," the source said. "But
Tavares said no, we've raised prices and we're sticking to it.
Sure enough, sales stabilised and he'd beaten the rebellion."
Another thing Tavares and Ghosn now have in common is the
close supervision of the French government as a large and
boisterous stakeholder in both manufacturers.
Already Renault's biggest shareholder with a 15 percent
holding, France is buying 14 percent of Peugeot, matching the
stakes to be held by its founding family and Dongfeng.
Politicians like Industry Minister Arnaud Montebourg may
expect the two national champions to pool more resources, after
investing 800 million euros of taxpayers' funds in Peugeot.
"It's interesting to observe the national mobilisation
around PSA," Montebourg replied indirectly last week to a
question about potential cooperation between the carmakers.
"The French people have effectively become co-owners of PSA
and are bound to consider that it belongs partly to them."
Some Renault managers are wary that the company could be
pressured to share more with its struggling French peer than it
would like. An early test may be self-driving vehicles, where
Ghosn is already leading a government-backed research push.
"The natural play would be to have both your French car
companies involved," said a serving Renault-Nissan executive who
knows both CEOs. "So let's see where that goes."
Renault and Peugeot already cooperate fruitfully on
early-stage engineering projects through France's
government-assisted PFA industry body, Tavares said.
"If, to accelerate the PSA turnaround, there are
opportunities to collaborate then of course we should address
them," the new CEO added.
"Carlos Ghosn and myself are professional people - it's in
the interest of both our companies that we get along properly."
($1 = 0.7240 euros)
(Additional reporting by Andy Callus and Gilles Guillaume;
Editing by Mark Potter)