Howes: France’s PSA cars coming to America, eventually

Daniel Howes
The Detroit News

Detroit — France’s PSA Groupe SA, proud new owner of General Motors Co.’s European operations, isn’t done expanding its global footprint.

Twenty-seven years after leaving the U.S. market, the maker of Peugeot and Citroën-brand vehicles is plotting its return to America. But the Paris-based automaker plans to do it on PSA’s terms, timetable and “the right way” because the move “is only about upside,” CEO Carlos Tavares said in a small group interview on the sidelines of the North American International Auto Show.

“It’s not because we are successful in Europe that we would be successful in the U.S. We are making good profit. We have no debt. We don’t need to rush. We want to make sure we are not arrogant in the way we think consumers are viewing us. We need to do things right.”

And to look for opportunity, as Tavares signaled not too subtly. The biggest reason: to shield the group from the vagaries of regional economic swings. The more PSA’s revenue and profits can be drawn from different geographic regions, the better.

“We have a strategy to become global,” he said. “It protects the company to have a diverse footprint around the world. PSA is making money in Latin America. It is making small money in Russia. We consider ourselves small and agile, which does not give us the ability to be dogmatic. We are very open to make business with anybody else.”

There you have it. The people who ended GM’s 90-plus-year automotive entanglement with Germany’s Adam Opel and the United Kingdom’s Vauxhall brands, manufacturing network and technical development center are open to more partnerships, perhaps even mergers, around the world.

Their approach: move quickly, invest frugally, maximize existing assets and empower employees to make decisions and find solutions. Inside PSA, anyway, it’s delivering results: in 2013, the group posted an operating margin of negative 2.8 percent. It broke even the next year, reached 5 percent in 2015, 6 percent in 2016, and ran at 7.3 percent through six months of last year.

And Opel? He sees “positive signs” the former GM operations are “moving in the right direction,” emboldening PSA’s self-described “pragmatic” leadership to look for what Tavares calls a “win-win, always.”

Is he talking with Ford Motor Co. about a possible tie-up in South America? “Not so far,” he said, smiling slightly. “You’ll see.” Could he have an interest in the truck lines of Fiat Chrysler Automobiles NV? “FCA is doing a great job. The way they are managing their business is delivering great results.”

Yes, it is. And acquiring the likes of FCA’s Ram pickup unit, or its Jeep brand, could be the kind of regional insurance Tavares is seeking. The only problem: FCA CEO Sergio Marchionne used his annual Detroit auto show talk-a-thon to reinforce that parts of the group are not for sale.

“Timing is everything in this business, and if you get that wrong, all bets are off,” Marchionne said. “The answer is no, we’re not going to break up anything. We have no intention of breaking it up and giving anything to the Chinese.”

Or the French, presumably. That’s one reason PSA is pushing ahead with a two-part, 10-year strategy to enter the rich U.S. market. The first step: introducing ride-sharing programs in select cities to learn more about would-be American customers, a precursor to reintroducing French metal here.

“We need to accept the risk in order to grab the opportunities,” Tavares said. In North America, “the risk is not to do the right things. The risk is to do things poorly. Because our company is profitable and healthy, we do not need to rush. We need to do it profitably.”

And, perhaps, very differently. Could the French automaker seriously explore selling vehicles directly to consumers, a concept whose time is fast approaching despite dealer franchise laws that bar such transactions in such states as Michigan? Which of its major brands, Peugeot or Citroën, would they be most likely to sell in the States?

And why would this time be any different than last time? At a time when American consumers are turning unambiguously toward trucks, SUVs and crossovers, a French automaker with strength in small cars is looking to make it again in the United States.

French rival Renault abandoned the U.S. market and, so far, is staying out, even as its partner, Japan’s Nissan Motor Co., competes here. The re-introduction of FCA’s Fiat brand, a small car specialist, is falling short of expectations in the United States. And now comes PSA.

Does Tavares know something the rest of us don’t? We’ll find out, but an answer isn’t likely anytime soon.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.