Ex-Airbus Boss Should Realign Peugeot

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Ex-Airbus Boss Should Realign Peugeot
Ex-Airbus Boss Should Realign Peugeot

Video: Ex-Airbus Boss Should Realign Peugeot

Video: Ex-Airbus Boss Should Realign Peugeot
Video: A320 Mode Reversions 2023, October

Christian Streiff is the new boss at PSA Peugeot. At Airbus, the manager initiated a restructuring program - and then gave a spectacular resignation.

By Hans-Hermann Nikolei

In 2006, as the 100-day boss of Airbus, Christian Streiff launched the “Power8” renovation program. Then he resigned spectacularly because the influence of conflicting political interests was too great for him. Now the man from Lorraine is joining PSA Peugeot Citroën to renovate Europe's second largest car manufacturer. With the help of the owner family Peugeot, he was the first to clean up the top management. He created an executive committee under his leadership and exchanged managers, including the head of the Citroën brand and the program director.

New strategy is necessary

PSA is not a restructuring case, but - like Airbus - it has to be realigned due to structural deficiencies in a tough competition. Streiff's tasks read like an excerpt from the “Power8” program: streamlining administration, reducing the number of suppliers, more production in low-wage countries, freeing up capital for investments in future models.

Streiff's predecessor Jean-Martin Folz had preserved the Group's independence during his ten years in office. With alliances with BMW and FIAT, Mitsubishi and Toyota, he advanced the group in engine construction and in the product range. The concept initially worked brilliantly: PSA increased sales from 2.1 to 3.37 million cars and increased its market share in Europe from 11.9 to 13.8 percent. The turnover has doubled since 1997 from 28.5 billion to 56.6 billion euros. And losses were a thing of the past.

But in the end the «Folz concept» ran out of air. For 2006 Folz had originally targeted sales of four million cars. He stayed below 600,000. The targeted profit margin of six percent remains a dream. In addition, the group is still too dependent on Europe, where two thirds of the vehicles are sold. In China, PSA is trying to catch up and with 202,000 cars it sells almost as much as in Latin America. But the company is not even present in the USA.

Market share is falling in Europe

You can only grow with attractive models. Within two years, PSA has renewed two thirds of its product range. Nevertheless, the core market Europe went down. Since 2002 the market share has fallen from 15 to 13.1 percent. The distance to the VW group is therefore getting bigger and bigger. In 2006, PSA was already 1.1 million behind the Wolfsburg-based group with sales of 2.02 million cars, which increased the market share of its brands to 20.3 percent.

Streiff has already made it clear to the unions that the group structurally has one plant too many. The production in Ryton, UK, has just been closed with 2,300 jobs. The pressure to rationalize in the old plants will increase when PSA creates new capacities for 700,000 cars in the Czech Republic, Slovakia and Turkey as planned. Under Folz, the group workforce grew from 140,000 to 208,000, of which 82,400 were abroad. Streiff will have to reverse this trend.

Too many flops lately

Flops like the small car Peugeot 1007 or Citroën's sedan C6 can no longer afford PSA. The 1007 with sliding door received approval in the press, but was cut by customers. A sales test showed how important the price argument is: In January Peugeot offered the 1007 on the Internet with a 30 percent discount. All 96 cars were sold within a quarter of an hour. Then there is the quality argument: The susceptibility of electronic gimmicks to failure annoys many customers.

So Streiff has a lot of work to do. But he finds an overall solid basis at PSA. And he can count on the owner family Peugeot, which has the say with around 45 percent of the voting rights. Chairman of the supervisory board Thierry Peugeot is said to be very impressed by Streiff's ability to assert himself - and by his confident departure from Airbus. (dpa)