Tavares Keeping PSA Abreast of Industry Trends

PARIS – PSA Peugeot Citroen has fewer than 10 people working on business plans for the U.S., but the French automaker intends to introduce some kind of transportation service, CEO Carlos Tavares says.

‟We want to be part of that as an operator,ˮ he tells journalists at company headquarters here. Services like car sharing will help PSA ‟establish the synergies between carmakers and service providers.ˮ

PSA, which maintains an office in California, is working on several joint ventures with the Bolore Group that launched the Blue Indy electric-vehicle-sharing project in Indianapolis, and race-car driver Tavares has been there to observe it. In Europe, PSA has operated its MultiCity car-sharing system for several years, although Tavares says ‟it is hard to make a profit.ˮ

This year, PSA took a stake in Koolicar, a French car-sharing startup comparable to Airbnb for cars. Private car owners put a device in their car that allows renters to enter it with their badge and pay according to the time and mileage they accumulate.

‟We support the startup, but we donʼt bring it inside (as a wholly owned property) because that would kill it,ˮ says Tavares. ‟We want to learn how you can make money out of it.ˮ

PSA has modest objectives for its transportation service business – no more than 1% to 3% of total revenues in 2021. But Tavares sees the projects as being ready ‟if it becomes a real business.ˮ

Establishing a transportation service in the U.S. would require far less investment than a dealership network, but establishing a U.S. presence is essential for PSAʼs new Push to Pass business plan that has replaced the Back in the Game in-company goals.

Push to Pass, a reference to the race-car device that can turn out an extra 50 hp for a few seconds, sets goals for profitability and revenue growth for 2018 and 2021 and is based on launching 121 vehicles in six years, expanding into new markets to become truly international, and growing the service business.

Focus on New Markets, Engineering Expertise

Tavares says PSA will stage 28 new launches in Europe by 2021, 20 in China and Southeast Asia, and 23 in Africa and the Middle East. New vehicles will include a second generation of EVs in 2019, as well as a plug-in hybrid with 30-mile (50-km) electric-only range for central cities and 480-mile (800-km) range on the road. The plug-in technology will be offered ‟at the top of our range,ˮ he says, because ‟there will be a 5-digit price premium to cover the costs.ˮ

The new European vehicles include the recently launched Peugeot Expert and Citroen Jumpy work vans, the first of five for this year.

The internationalization plans include a €430 million ($481 million) investment announced earlier this year in Iran with partner Iran Khodro for a plant that could begin assembling 100,000 units a year in 2017, and development of an assembly plant in Algeria to rebuild sales lost after new import tariffs took effect.

Although the company reduced engineering costs during the Back to Basics program implemented following its near-bankruptcy, it does not intend to scale back to the industry benchmark of 10% of revenues, Tavares says. That average includes companies with substandard engineering, ‟and our strategy is to keep strong on engineering and technology,ˮ he says. ‟France is very good at training engineers and technicians.ˮ

The company was the leader in France last year for patent applications, and he says PSA investment in engineering will stay at 11% or 12% of revenues.

PSA develops diesel engines with Ford and gasoline engines with BMW. Recently it began researching connected-car technology with Ford. The cost of developing software rapidly is approaching the cost of developing a powertrain, Tavares says, but notes PSA is developing its autonomous-car projects independently.

‟Our autonomous cars will be what the market says it wants,ˮ he says, beginning with a step-by-step approach toward true driverless autonomy. ‟Any customer will be totally demanding for safety. We do not believe it is thoughtful to go from here to full autonomy in one shot.ˮ