PSA’s Tavares believed to make good on pledges image

With an ailing European market that saw two-decade lows after a six-year slump, the region’s second largest automaker was on the brink of collapse before last year’s salvation that came from China’s Dongfeng Motors and the French government.

Almost twelve months ago the Chinese partner and the French authorities agreed to buy matching stakes in the company in a capital expanse plan that also led to a matching (by diminishment) share holding of the Peugeot founding family. The rescue also led to the emergence of former Renault No. 2 Carlos Tavares as the new PSA chief executive officer. Now, after narrowly avoiding the financial disaster, according to industry experts, the new leadership is on track to fulfill its turnaround goal with a strategy that focuses on better cash flows, reduced inventories and the dismissal of unprofitable model nameplates. The company, expected to publish the full-year financial results for 2014 this week, has been buoyed by rising deliveries in China – the world’s largest single auto market, the incipient European recovery and the first breakthroughs of Tavares’ “Back in the Race” business plan.

Aiming to lift the profit drive at the money-losing French automaker. “much to the surprise of many, PSA enjoyed a strong 2014,” believe investment advisers at Exane BNP Paribas. While numerous – structural – issues remain, PSA “is starting to deliver”, says another investment firm – Morgan Stanley. PSA’s auto business jumped from posting losses to a 7 million euros operating profit during the first six months of last year and showed the first positive result since the first part of 2011.

Via Automotive News Europe