New Peugeot CEO pledges rebound after Dongfeng rescue

Wed Feb 19, 2014 11:56am EST
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By Laurence Frost

PARIS (Reuters) - PSA Peugeot Citroen's new boss promised a back-to-basics turnaround as the troubled carmaker unveiled a French-backed rescue deal with China's Dongfeng on Wednesday, along with another multibillion-euro loss.

Incoming CEO Carlos Tavares said he saw "huge room for improvement" as Peugeot announced a 3 billion euro ($4.1 billion) fundraising that brings new leadership, more time to recover and an end to two centuries of family control.

Dongfeng Motor Group and the French state will each pay 800 million euros for 14 percent of the carmaker to match the founding Peugeot family's reduced holding, Peugeot said, confirming earlier Reuters reports.

While the deal marks the end of an era, with Thierry Peugeot stepping down as the dynasty's last chairman, it may also clear the decks for a deep review of the group's business practices and corporate culture.

"It's a return to fundamentals," Tavares said from a podium shared with outgoing CEO Philippe Varin.

"Our challenge is to be the best of the Europeans in terms of (our) manufacturing and distribution model, which frankly is not the case today," he told analysts and reporters.

Peugeot will source parts more competitively, accelerate the development of Citroen's premium DS line into a standalone brand and drop some of the group's current 60 models to cut costs and improve pricing, he said.

The former No.2 to Renault boss Carlos Ghosn also promised measures to tame Peugeot's losses in Latin America and Russia, to be unveiled with a new mid-term plan in April.   Continued...

Employees assemble cars at a production line of Dongfeng Peugeot Citroen Automobile factory in Wuhan, Hubei province, February 13, 2014. REUTERS/Darley Shen