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La Tribune: Peugeot Family Thinking Of Sacking PSA CEO Varin Over Lost Sales And GM Alliance

PSA’s owners are not happy with CEO Philippe Varin. They would already have sacked him, would a replacement be on hand, reports France’s La Tribune. Reason for the disenchantment: Catastrophic sales, and the alliance with GM.

La Tribune appears to have sources inside of the Peugeot family. That family, says Reuters, “controls 25.2 percent of the company’s capital and 37.9 percent of its voting rights.”

Varin took over in the tumultuous years of 2009. Initially, there were good results, some say because of the Peugeot 3008 and the Citroen DS models. Others say it was because of the cash-for-clunkers programs in Europe. Then, PSA’s luck began to change. PSA is heavily exposed to southern Europe and lacks the export prowess of neighboring Volkswagen to make up for the difference and to capitalize on the soft Euro. Says Reuters:

“This prompted PSA to seek an alliance with General Motors earlier this year, with General Motors becoming PSA’s second-largest shareholder with a 7 percent stake.”

Following the rule that two sick people don’t make a healthy one, this alliance was received with skeptical comments in the industry. Now, the Peugeot family is having doubts whether “this merger with a U.S. company whose European operations are chronically lossmaking and that suffer from structural overcapacity” is such a good idea, writes La Tribune. Varin was the chief proponent of the alliance with GM, and a possible ditching of the CEO could signal “mistrust vis-à-vis GM, which today owns 7% stake in the French carmaker,” La Tribune writes.

Should the imbroglio over the delivery of parts to Iran continue, Varin could be offered as a sacrifice to the gods of opinion, but this would not be the real reason for his sacking.

January through May, PSA lost 15 percent of sales in the EU, while the total market lost 7.7 percent. PSA’s market share slipped more than a point to 12.1 percent. PSA shares lost around 24 percent of their value since the start of 2012. On receipt of the news, the PSA share climbed 6.5 percent higher, probably the only time in his career when Varin hates to see the stock of his company go up.

Meanwhile at Renault, Carlos Ghosn, CEO-Superman of Nissan and Renault, is casting worried looks in the direction of  cross-town rival PSA. 5 months into the year, the Renault group is doing even worse than PSA, and what could be happening to Varin could give Renault’s French stockholders ideas. In Europe, Renault lost 19.7 percent of sales in the first five months. Ghosn’s other job at Nissan on the other hand is safer than ever. Nissan closed the last fiscal year as Japan’s most profitable car company, for the first four months of the year, Nissan’s global sales are up 16.6 percent.