Peugeot's CEO prepares to step aside for Dongfeng deal: sources

Sat Nov 23, 2013 10:58am EST
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By Laurence Frost and Norihiko Shirouzu

PARIS/BEIJING (Reuters) - PSA Peugeot Citroen (PEUP.PA: Quote) is interviewing candidates to replace Chief Executive Philippe Varin, after Chinese partner Dongfeng said a deeper alliance under negotiation should be accompanied by management change, sources with knowledge of the matter said.

Varin himself is leading the hunt for a successor who has the caliber and experience to head a global carmaking alliance - qualities that Dongfeng (0489.HK: Quote) has emphasized when discussing a capital tie-up and expanded industrial cooperation, according to the two sources.

After speaking at an industry conference in Berlin on Saturday Varin declined to comment on a report in Le Figaro that the troubled carmaker may hire former Renault chief operating officer Carlos Tavares as his new second-in-command.

"I am sorry, I have a plane to catch," he told reporters.

Peugeot and Dongfeng are in talks to build on their existing Chinese joint venture with cooperation in other markets and a multi-billion-euro share issue that would see Dongfeng and the French government acquire stakes in the French carmaker, sources familiar with the matter have said.

Peugeot, one of the carmakers worst-hit by Europe's six-year market slump, is cutting French jobs and plant capacity as it struggles to halt losses within two years.

Even then it will lack the financial clout and industrial scale to compete globally on its own. Varin has acknowledged that Peugeot will need new partners and fresh capital to support future vehicle and technology investments.

Varin, 61, joined Peugeot from Anglo-Dutch steelmaker Corus in 2009 and has steered the company through the worst of the European crisis. But his support for a deeper tie-up with 7 percent shareholder General Motors (GM.N: Quote) or Dongfeng has led to bouts of tension with members of the founding Peugeot family, which would lose control of the company in the planned capital hike.   Continued...

Philippe Varin, Chief Executive Officer of French carmaker PSA Peugeot Citroen, attends the company's First-Half 2013 results presentation in Paris July 31, 2013. REUTERS/Benoit Tessier