Reuters (Paris) - PSA Peugeot Citroen's brands chief Jean-Marc Gales is leaving Europe's second-biggest automaker, the company said on Wednesday, as it struggles to halt a slump in earnings and market share.
Gales was hired as the No.2 executive in 2009 to lead the two French car brands upmarket.
"The rebranding side of Gales's remit had been going quite well," said London-based Societe Generale analyst Stephen Reitman. "But the missed performance goals and multiple profit warnings have to reflect a failure to meet sales targets."
CFO Frederic Saint-Geours will move to fill the vacant post and company veteran Jean-Baptiste de Chatillon will take over as finance chief, PSA said.
PSA's European deliveries dropped 8.2 percent in January-November despite a series of model launches, outpacing the overall market's 1.4 percent decline and trimming the group's market share by almost a percentage point.
Chief Executive Philippe Varin warned last month that the core automotive division would likely post a loss for 2011, compared with an initial profit target of more than 621 million euros ($811 million) announced in February 2011.
In October, Varin had said the division would come "close to break even", unveiling plans to generate 800 million euros in savings this year by cutting 6,000 European jobs.
French automakers have also suffered from the withdrawal of domestic sales subsidies at the end of 2010. The country's car market shrank 18 percent in December, the CCFA industry association said on Monday, for a 2.1 percent full-year decline.
"We view this management change as an overall positive," Credit Suisse analysts said in a note.
Saint-Geours, who has held positions including Peugeot brand chief in a 25-year PSA career, seemed "more at home when it came to running the operations within PSA rather than communicating to capital markets", they added.
Peugeot shares fell 1.6 percent to close at 12.97 euros, extending the stock's 12-month decline to 57 percent -- the biggest decliner on the 15-member STOXX Europe 600 autos & parts index.
FOCUS ON COSTS
Chatillon's most recent role as financial controller could equip him well to deliver the promised savings as CFO, amid deteriorating European demand and pricing.
"Given what's happening in 2012, you need someone who knows where cuts can be made," Societe Generale's Reitman said. "With no guarantees of relief on the revenue side, the focus of the performance plan moves to costs."
Gales, who will continue to sit on the PSA management board until March, joins European auto suppliers' association CLEPA in April as chief executive, the Brussels-based organisation said on its website.
In an emailed statement, the former Mercedes sales chief said he would also take up a deputy professorship at London's Imperial College. "After a very rich career in automobiles, I have decided to change direction," he said.
Gales is leaving PSA of his own accord for personal reasons, said a spokesman for the Paris-based company who declined to comment on any financial terms.
"If he were being fired, he would not stay on the management board for two more months."
Nonetheless, his robust management style had sometimes ruffled feathers at the family-controlled automaker, according to a former PSA executive who worked with the Luxembourg national.
Some of the strategy ideas he openly floated also seemed at odds with the rest of management. Last March, Gales outlined plans for a new, low-cost Chinese brand to be sold online in Europe. The idea was played down by Asia chief Gregoire Olivier weeks later and ultimately rejected by Varin.
As well as succeeding Gales, Saint-Geours will continue to head the Banque PSA financing arm and sit on the management board, the automaker said.
"In this difficult period, I am delighted that Frederic Saint-Geours is taking on the role of executive vice-president for brands," Varin said in the company statement.
