Taking Pole Position: Carlos Tavares, the Go-Getting CEO
Carlos Tavares, the newly appointed Head of the Board of PSA Peugeot Citroën, is a fearless, go-getter of a CEO
Carlos Tavares tests his training wheels
Born in 1958 in Lisbon to a Francophile family, the young Portuguese Carlos Tavares moved to France aged 17. He studied engineering at the École Centrale in Paris, one of the most prestigious engineering schools in France, before joining car manufacturer Renault as a test-driving engineer in 1981, a company where he would go on to spend his next twenty-three years.
With a ground-roots passion for cars – in his spare time the 56-year-old races a 600 brake horsepower GP2 car in international competitions –, in 2004 Tavares joined car manufacturer Nissan, 43% owned by the French Renault. He worked in both the US and Japan, and eventually led Nissan’s operations across the entire US before in 2011 returning to Renault as COO.
Tavares sets his sights on pole position
But after a few years in the silver medal spot, Tavares started eyeing the top rung on the podium, a spot already taken at the Renault Group by long-running CEO Carlos Ghosn. Set on accomplishing his goal, Tavares rather unusually announced his ambitions to the world in an interview with Bloomberg: “Anyone who is passionate about the auto industry comes to a conclusion that there is a point where you have the energy and appetite for a number one position.”
Unsurprisingly, the man who was once seen as Ghosn’s successor was unceremoniously dismissed from Renault, but just three months later Tavares got his prize as he was hired as CEO of Renault-Nissan’s direct rival, PSA Peugeot Citroën.
PSA Peugeot Citroën
But the once great French institution PSA has seen better days. The years 2012 and 2013 saw PSA lose around £5 billion. Car sales have flagged, and individual sales have become unprofitable. In effort to save the company, in 2013 shareholders approved a bail out led by the French government and the Chinese manufacturer Dongfeng Motors. Go-getting Tavares has his CEO-job but must now put his money where his mouth is.
Getting PSA back on track
Since taking the position, Tavares has launched a turnaround plan called Back in the Race which aims to establish a healthy cash flow and position the company for long-term success. His plan focuses on reducing the product portfolio from 45 models to 26, reducing fixed costs, improving the net pricing of cars, cutting manufacturing costs, streamlining problem markets, and investing in quality and value for money over volume.
He has set himself ambitious targets. But consensus is that Tavares has the right experience and tenacity to hit them. As COO at Renault, where he was known to focus on cost cutting and product innovation, Tavares achieved great things, and proved himself to be a man who could make money. He pushed the company towards greater sales outside Europe to reduce reliance on its home region. He expanded the eastern European and South American markets by offering limited ranges in high volumes. He pushed through a significant deal with unions to cut the French workforce and freeze wages in exchange for not closing down domestic plants. And his plan to expand the Renault offering to two upscale brands was taken on after his departure with the revival of the Alpine sports-car and the expansion of the Initiale Paris insignia into a luxury brand. At Nissan, he was equally successful, particularly in China where profits increased significantly under his watch, from a 46.7 billion yen loss in 2009 to 209 billion yen ($2.2 billion) profit one year later.
Tavares’s first half year 2014 saw a small but symbolic profit of £5.6 million. This is the first sign of what he can do as CEO. And while the next few years will prove his abilities either way, the fearless and go-getting Tavares has certainly revealed an interesting way to go about getting a new job.