PSA Group CEO Carlos Tavares is about to add Fiat Chrysler's U.S. dealer network to his growing global empire.
But it won't be new territory for the 61-year-old native of Portugal. He's the former president of Nissan North America, after all. And for more than three years, Tavares has been monitoring the U.S. retail market, trying to figure out how to stage a successful return of the Peugeot brand.
How he blends that effort with the care and feeding of the 13 percent of the U.S. market that he is about to inherit promises to be one of the most significant chapters of the PSA-FCA story.
Tavares' U.S. emissary has been Larry Dominique, a former colleague at Nissan.
The 57-year-old Dominique has been leading the return of Peugeot to the United States at a pace that makes flowing molasses look swift. He was formally hired in early 2017, after studying behind the scenes on Tavares' behalf for about a year.
Dominique's mandate is to bring a car to the U.S. by 2026 and be profitable coming out of the gate. Dominique has said he has one chance to get it right, and his boss has given him the leeway to take the time he needs to figure it out.
Dominique and Tavares are convinced that the current retail business model isn't sustainable. Profit is simply too hard to come by in too many dealerships. Ubiquitous stair-step incentives damage brands they're designed to help, and many dealers depend on them to stay in the black.
Among the questions Dominique is asking: Do service operations need to be mated to sales facilities? Is it possible to create a destination that car shoppers want to visit, where they might even find delight in experiencing "the brand?" How can dealers' startup costs be reduced? Might technological tools be used as a way around oppressive fixed costs while also appealing to a generation of digital-savvy consumers?
One thing that has been decided is that PSA will have retail partners when it enters the U.S. It won't go the Tesla route and sell directly to consumers.
But now the plot thickens.
PSA's announced merger with FCA suddenly throws a different U.S. dynamic at Tavares, who will be CEO of the combined companies.
He could allow Dominique to proceed with PSA's market entry in a cocoon, as if Dodge, Ram, Jeep, Fiat and Chrysler weren't part of the family.
He could bestow PSA North America with Saturn-like status as an enterprise in its own right, one that someday may be used as a wedge for learning — and change — throughout the corporation.
Or he could take the new mindset that Dominique has been bringing to Peugeot's return and overlay it onto all of the Fiat Chrysler brands.
No one's talking yet.
But remember this: Tavares finally made Opel profitable — something former owner General Motors failed to do for two decades — by not accepting the status quo. So don't expect him to view a "broken business model" as an excuse for not trying to change the way things work in U.S. retailing.
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November 04, 2019 at 12:00PM
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What PSA's Tavares could mean for FCA retailing in the U.S. - Automotive News
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