PSA and Fiat Chrysler are merging under new leadership.
Carlos Tavares, native of Portugal, is little known for an executive who is about to take the helm of the $50 billion global automaking giant resulting from the merger of PSA Group and Fiat Chrysler. Announced in October, the deal is set to create the world’s fourth-largest carmaker by vehicle sales behind Volkswagen, Toyota and Renault-Nissan.
Many argue that 61-year-old Tavares, a weekend auto racer, has the qualities to push the group past its rivals. Appointed CEO of PSA in 2014, it took him just a year to restore the firm to the black after years of heavy losses. He performed the unthinkable once again in 2017, when PSA acquired the chronically loss-making Vauxhall-Opel from GM and brought it back to health in record time. Today, PSA is one of the most profitable car-making groups in the world.
Tavares says that PSA and Fiat Chrysler complement each other geographically, and in terms of technology and brands. He could have mentioned company culture, as well. In Tavares, the scion of Italy’s Agnelli industrial dynasty and chairman of Fiat Chrysler, John Elkann, may have found the leader he has been searching for since his trusted CEO Sergio Marchionne died suddenly last year. “Tavares’ management style resembles his latest creation, the new PSA car platform: horizontal, flat and modular,” says Carlo Alberto Carnevale-Maffè, professor of strategy at SDA Bocconi School of Management in Milan. “Like Marchionne, he’s frugal yet fanatic, sober yet excited, delegating yet extremely demanding.” Carnevale-Maffè opines that management isn’t about organizational power, but personal values. “It’s the way you dress, the size and style of your office,” he says. “You cannot legitimately cut costs in a troubled factory with the tacit approval of labor unions if you don’t practice personally what you preach publicly.”
While Tavares has stated that no legacy brand will be terminated, some observers worry that the new company will house too many brands—Peugeot, Citroën, DS, Alfa Romeo, Dodge, Jeep, Lancia, Maserati and more. Carnevale-Maffè is convinced he can pull it off: “He is driven by industrial faith and personal commitment. Tavares breathes, drinks, eats cars.”