Carlos Tavares faces major challenges as PSA’s new CEO image

Less than three months after falling from grace as the likely successor to Renault/Nissan Alliance CEO Carlos Ghosn, Carlos Tavares has resurfaced – and he won’t have to move very far, taking on the top position at the troubled PSA Peugeot Citroen.

Considered one of the global auto industry’s rising stars, the 55-year-old Tavares had a potentially career-ruining flame-out in August when he announced during an interview that he’d like to leave his job as chief operating officer of Renault for a job as CEO of one of Detroit’s Big Three makers. That didn’t sit well with his then-boss Ghosn who quickly gave Tavares his walking papers.

Exactly why Tavares spoke out was unclear. So was the potential fallout, some observers wondering if the Portugese-born executive was simply letting the world know he wanted a better job – others warned that Tavares might have made himself untouchable. But it turns out his timing was close to perfect and his method far from madness.

While his former employer Renault has had its share of troubles, especially in light of the ongoing slump in the European automotive market, few manufacturers are in deeper trouble than Peugeot which has been cutting capacity and turning to the French government for financial assistance. In a bid for further assistance, the heirs to the Peugeot family have suggested they would be willing to relinquish control. But the most immediate victim of the company’s problems has turned out to be CEO Philippe Varin.

“By chosing Carlos Tavares, reknowned automotive industry professional, to succeed Philippe Varin in 2014, the Supervisory Board ensures that the strategy of recovery and development to overcome the current crisis, a strategy that has been carried out for several years, will continue to be executed over the long term,” said Thierry Peugeot, President of the Supervisory Board.

In his new job, Tavares will have plenty of challenges to cope with. He will have to decide how to move forward with – or end – the once seemingly promising alliance Peugeot had formed with General Motors. That partnership has been scaled back sharply in recent months and could be abandoned entirely – especially if Peugeot moves ahead on a possible deal with Chinese partner Dongfeng that would like to acquire a 10% chunk of the French company.

Either way, Peugeot remains one of Europe’s most troubled car manufacturers. It’s automotive group lost 510 million euros during the first half of 2013, and it has been burning through its cash reserves. By comparison, Renault – under Tavares – saw its earnings surge beyond analysts’ expectations during the first half. He was also credited with a significant turnaround in North America where he ran Nissan operations before being reassigned to Renault headquarters.