French carmaker Peugeot recruits new chief executive

Struggling French automaker PSA Peugeot Citroen said Monday it had recruited the former number two of its competitor Renault to take over as its chief executive next year. "After conducting extensive research, the Supervisory Board chose Carlos Tavares to succeed the current president of the Managing Board," PSA Peugeot Citroen said in a statement. It said Tavaras, a former chief of operations at Renault who also held management posts at its Japanese ally Nissan, would join the board on January 1 and succeed Philippe Varin as chief executive during 2014. PSA Peugeot Citroen shares jumped 5.1 percent to 10.75 euros on expectations of Tavares's appointment and the announcement of a deal with Iran that will lead to temporary relaxation of sanctions in what was formerly a key market for the carmaker. During the transition, Varin will continue carrying out strategic discussions begun with various partners while Tavaras will begin working on efforts to turn around the company's fortunes, the statement said. "By chosing Carlos Tavares, renowned 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, chairman of the Supervisory Board. Tavares's appointment at Peugeot comes amid other reports that the company is still in negotiations with Chinese carmaker Dongfeng about a potential capital injection. The head of China's second-biggest carmaker said last month the company was "discussing the rationality" of investing in Peugeot. The hiring of Tavares was widely interpreted as a gambit by cash-strapped Peugeot to satisfy Dongfeng. "Varin appears to be too closely tied to the Peugeot family. Tavaras has a more independent profile and could bring a newer vision, which is being well received by the markets," said a Paris stock broker. In August, Tavares gave an interview in which he said he had little prospect of being able to succeed Renault chief executive Carlos Ghosn as head of the group and left the company abruptly two weeks later. Peugeot, which reported falling sales for the third quarter, is in the throes of a radical restructuring involving deep job cuts and the closure of a factory. It was also rescued last year by means of big state guarantees for its financing and credit arm, and posted a record loss of five billion euros ($6.8 billion). Unlike Renault, which has its alliance with Nissan and budget brand Dacia, or Fiat which has Chrysler, Peugeot initially did not have an alliance or brand elsewhere to help it weather the slump in European car sales to near 20-year lows due to the global financial crisis and eurozone debt crisis. Peugeot struck a strategic alliance with General Motors last year, with GM taking a 7 percent stake in the French carmaker. GM, which owns struggling German carmaker Opel, is looking at Opel and Peugeot to purchase parts and develop vehicles together to reduce overcapacity and generate $2 billion (1.5 billion euros) in savings per year by 2016.