Tavares: PSA Must Cut Costs, Focus on Profits

PSA Peugeot Citroen's new CEO Carlos Tavares says the company needs to refocus its corporate culture on profitability, the Financial Times reports.

Tavares, who took over operational control of PSA three weeks ago, hints that he may launch a new cost-cutting drive in addition to the company's current goal of reducing costs €1.5 billion by 2016, depending upon results of current turnaround efforts.

Last year PSA lost €2.3 billion and reported a negative cash flow of €426 million. The company hopes to end its cash burn in two years. Tavares tells reporters there is a "big opportunity" to reduce assembly costs in Europe.

He adds that PSA will be able to trim component costs and boost revenue in part through its expanding partnership with Dongfeng Motor Group, which has agreed to buy 7% of the French company through a new-equity sale.

The companies plan to build a new engineering center that will coordinate their future product development. Doing so, Tavares says, will give PSA "full access" to China's supply base.