By on June 20, 2012

PSA’s owners are not happy with CEO Philippe Varin. They would already have sacked him, would a replacement be on hand, reports France’s La Tribune. Reason for the disenchantment: Catastrophic sales, and the alliance with GM.

La Tribune appears to have sources inside of the Peugeot family. That family, says Reuters, “controls 25.2 percent of the company’s capital and 37.9 percent of its voting rights.”

Varin took over in the tumultuous years of 2009. Initially, there were good results, some say because of the Peugeot 3008 and the Citroen DS models. Others say it was because of the cash-for-clunkers programs in Europe. Then, PSA’s luck began to change. PSA is heavily exposed to southern Europe and lacks the export prowess of neighboring Volkswagen to make up for the difference and to capitalize on the soft Euro. Says Reuters:

“This prompted PSA to seek an alliance with General Motors earlier this year, with General Motors becoming PSA’s second-largest shareholder with a 7 percent stake.”

Following the rule that two sick people don’t make a healthy one, this alliance was received with skeptical comments in the industry. Now, the Peugeot family is having doubts whether “this merger with a U.S. company whose European operations are chronically lossmaking and that suffer from structural overcapacity” is such a good idea, writes La Tribune. Varin was the chief proponent of the alliance with GM, and a possible ditching of the CEO could signal “mistrust vis-à-vis GM, which today owns 7% stake in the French carmaker,” La Tribune writes.

Should the imbroglio over the delivery of parts to Iran continue, Varin could be offered as a sacrifice to the gods of opinion, but this would not be the real reason for his sacking.

January through May, PSA lost 15 percent of sales in the EU, while the total market lost 7.7 percent. PSA’s market share slipped more than a point to 12.1 percent. PSA shares lost around 24 percent of their value since the start of 2012. On receipt of the news, the PSA share climbed 6.5 percent higher, probably the only time in his career when Varin hates to see the stock of his company go up.

Meanwhile at Renault, Carlos Ghosn, CEO-Superman of Nissan and Renault, is casting worried looks in the direction of  cross-town rival PSA. 5 months into the year, the Renault group is doing even worse than PSA, and what could be happening to Varin could give Renault’s French stockholders ideas. In Europe, Renault lost 19.7 percent of sales in the first five months. Ghosn’s other job at Nissan on the other hand is safer than ever. Nissan closed the last fiscal year as Japan’s most profitable car company, for the first four months of the year, Nissan’s global sales are up 16.6 percent.


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18 Comments on “La Tribune: Peugeot Family Thinking Of Sacking PSA CEO Varin Over Lost Sales And GM Alliance...”

  • avatar
    el scotto

    Lemme see, GM is having huge problems with Opel; and the solution is to buy into Peugeot. I guess it makes sense to someone. How about a Peugeot-Mazda alliance? French funkiness and Mazda engineering?

  • avatar

    Their China operation is also going nowhere — apparently folks in the Middle Kingdom don’t see anything romantic about weird looking econoboxes.

  • avatar

    PSA lost 15% of their sales so far this year; Renault 20%. Not that GM should brag, but how does Opel not doing well sound out of place?
    Sounds like the good ship Europe is springing many leaks. VW might be doing okay, but if any more European countries go on life support, even VW might glad its doing well in the BRIC countries!

  • avatar

    So explain to me how the family was not fully consulted before the GM deal and fully aware of the volume market in Europe being in the shitter?

  • avatar
    Cammy Corrigan

    The Euro problems are very analogous to the European car industry.

    As much as we’ve trying to patch the problem up, it keeps breaking out. Just as Greece elects a Europhillic government, Spain and Italy are now starting to seriously wobble.

    Same with the European car industry. We’ve had serious overcapacity issues for years and as much as we’ve tried to hide it (i.e bangers for cash, stupid tie ups, etc.) it keeps coming back. Someone HAS to go and the two front runners are Renault and PSA. However, the implosion almost certainly won’t happen in France. Francois Hollande will not let their car industry fail. They’ll subsidise it. They own 15% of Renault and have close ties to PSA.

    If someone is going to die, it’s going to be either FIAT, Opel, or one (or two) of the smaller Japanese players.

    • 0 avatar

      But one of the French players certainly could swallow the other.

    • 0 avatar

      @Cammy: You are right, regarding the french car industry & politics. But the reasons why PSA seems to be in deep shit now are three-fold, all homegrown, in my opinion:
      1) relying too much on Western-European markets for the last decades
      2) loosing competitiveness in the mid-size and luxury cars range
      3) by giving up usability combined with elegance and following weird, ugly designs (like, e.g., the 407 range)
      From an engineering point of view they did quite well, but nobody knows/cares.

    • 0 avatar

      Rather than outright shutdown of one of the European makers I think further consolidation is more likely to occur along with moving more manufacturing east. It would seem to me PSA needs to find a partner outside of Europe to work with and IMHO Ford would be a much more natural choice than GM but that’s just my $0.02.

  • avatar

    It’s not going to be the Japanese, that’s for sure, because they are all highly profitable (Mazda is the exception but they are part of a huge conglomerate), and even perennial laggard Mitsubishi made 294 million $ in net profits in FY 2011 thanks to booming sales in SE Asia.

    • 0 avatar
      Cammy Corrigan

      Hello, Minneapolis_Lakers. :O)

      A couple of questions:

      1. What huge conglomerate are Mazda a part of?
      2. If Mitsubishi are so profitable due to good sales in SE Asia, wouldn’t that be MORE reason to withdraw from Europe and divert those resources to somewhere where one is wanted (and more profitable)?

      • 0 avatar

        Not necessarily. Hope springs eternal. Entirely pulling out of a market as large as the US, EU, SE Asia, China, now India should absolutely be a LAST RESORT. They may not be lighting up the sales charts now, but re-entry into a market you’ve left behind for some period of time that is more than one week but less than one entire generation is going to be far, far worse than simply stringing along with a loss for a few years. Not to mention the legal fees against a still-existent corporate entity by dealer chains and whatnot. And then having to re-establish dealer chains later, should you decide to come back.

      • 0 avatar

        Mazda is a part of the deep-pocketed Sumitomo keiretsu, as minneapolis_lakers himself informed us in an earlier TTAC Mazda discussion.

      • 0 avatar

        Not to speak for someone else, but I had always heard that Mazda was part of the Sumitomo keiretsu.

      • 0 avatar

        Hi Cammy Corrigan (great avatar, btw):

        Like others have posted,

        1. Mazda is a member of Sumitomo, one of the largest keiretsus in Japan.
        2. You are correct about this and in fact Mitsubishi is packing their bags in Europe by closing their only production base on the continent — the Nedcar factory in the Netherlands.

  • avatar

    Once again, GM has caused the sky to fall. A month into a deal with Peugeot and they are going under. WOW even for TTAC that is a stretch.

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