Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Peugeot Family Saved Their Car Empire From a Near-Fatal Crisis
Transcript
- Lucas: So, 2014. PSA Peugeot Citroën is burning cash. The European car market is in its sixth straight year of decline. The company is losing roughly 200 million euros a month. And by March, it's got about two weeks of liquidity left. Luna: Two weeks. That's not a turnaround story — that's a hospice case. Lucas: Exactly. And here's the part that makes this a family business story: the Peugeot family had been running this company since 1810. They survived two world wars, nationalizations, the oil crisis. But this was different. They had to decide: give up control, or watch the company die. Luna: And they chose to give up control. I mean, the state came in, right? Lucas: The French government and the Chinese automaker Dongfeng each took a 14 percent stake. The Peugeot family's share — which had been around 30 percent for decades — was diluted to the same level, 14 percent. They went from the dominant shareholder to just one of three equal blocks. And they lost their veto power. Luna: So the family that put its name on every single car became a minority partner in its own business. Lucas: Right. And that was the condition for the bailout. The state said, we're not going to rescue you if the family retains a controlling position. You have to accept that you're no longer in charge. And the Peugeots — after a lot of internal debate — agreed. Luna: I remember reading that some family members were furious. They saw it as a betrayal of the legacy. But the alternative was bankruptcy. Lucas: That's exactly the tension. The family's holding company, FFP — later renamed Peugeot Invest — had to make a cold calculation. If the company went under, the family name would be destroyed forever. If they accepted dilution, they kept a seat at the table, even if it was a smaller seat. And they bet that a smaller piece of a thriving company would be worth more than a large piece of a corpse. Luna: And that bet paid off. But it took a while, and it required bringing in someone who wasn't family. Lucas: Carlos Tavares. He was hired as COO in 2013, then CEO in 2014. He was not a Peugeot insider — he came from Renault. And he had a reputation as a cost-cutting machine. Within a year, he had slashed break-even point from 2.6 million cars to 1.6 million. He shut plants, cut thousands of jobs, and streamlined model lines. By 2015, PSA was profitable again. Luna: But here's the thing: Tavares wasn't just a hatchet man. He also pushed for expansion. In 2017, PSA bought Opel from General Motors. That was a huge gamble — Opel had been losing money for years. But Tavares applied the same playbook, and within a year, Opel was profitable. Lucas: And that acquisition changed the family's position. Because as PSA grew, the value of its stock increased. The family's 14 percent stake went from being worth maybe 1.5 billion euros in 2014 to over 6 billion by 2019. So their diluted stake was worth more in absolute terms than their pre-crisis controlling stake. Luna: That's the arithmetic of survival. But the family also started rebuilding its influence. They didn't just sit back. Lucas: No. Peugeot Invest became more active. They diversified into other assets — luxury goods, real estate, private equity. They became a proper family office, not just a holding company for the auto business. And they started using that financial strength to reassert board presence. By 2020, the family had regained two board seats and was involved in key strategic decisions. Luna: Then came the big one: the merger with Fiat Chrysler to create Stellantis in 2021. That was Tavares's vision, but the family had to sign off. And they did — even though it meant further dilution. Lucas: Right. In Stellantis, the Peugeot family's stake dropped to about 7 percent. But the combined entity is now the fourth-largest automaker in the world, with brands like Jeep, Ram, Peugeot, Citroën, Opel, Alfa Romeo, Maserati. The family's 7 percent is worth around 5 billion euros. And they have two board seats. They're not controlling, but they're influential. Luna: There's a lesson here for other family businesses facing a crisis: sometimes you have to give up control to preserve value. But you also need to have a plan to earn back influence over time. Lucas: And the plan has to be disciplined. The Peugeot family didn't panic. They didn't try to cling to power at all costs. They made a strategic retreat. And they used the breathing room that Tavares created to rebuild their own financial base. That's rare. Most families either fight to the death or disappear. Luna: It also helped that they had a non-family CEO who was brilliant and who respected the family's role, even if he didn't need their approval day-to-day. Lucas: Tavares has said publicly that he sees the Peugeot family as a long-term partner, not a nuisance. And that's another lesson: if you're a family that hires an outsider, you need to find someone who understands the value of continuity. Not just someone who'll slash costs and leave. Luna: Look, this is the kind of conversation that, honestly, if it made you think differently about family business strategy, that's exactly what we're here for. And if today's episode was worth a coffee to you, there's a link — buy me a coffee dot com slash fexingo. No pressure. Just a small way to keep these stories ad-free and coming. Lucas: Yeah. It's a tiny ask, but it genuinely helps us keep digging into cases like this. So thank you to anyone who's done that. Luna: Absolutely. And speaking of digging deeper — let's talk about what the Peugeot family did after 2021, because they didn't stop at Stellantis. They started using Peugeot Invest to make direct investments in other automotive tech companies. Lucas: Yes. They invested in a French battery startup called Verkor, which is building a gigafactory in Dunkirk. They also put money into autonomous driving software. So they're hedging: if the auto industry shifts to electric and software, they have exposure beyond Stellantis. Luna: That's classic family office diversification. But it also shows that they're thinking in generations, not quarters. Lucas: Exactly. The Peugeot family has been around for 200 years. They can afford to take a long view. The mistake many families make is either they refuse to adapt — like the Oetkers we talked about a while back — or they sell out entirely. The Peugeots found a middle path. Luna: One more thing I found striking: the current head of the family, Jean-Philippe Peugeot, is the eighth generation. He's not running the car company. He's running the family office. That separation of roles — family CEO vs. operating CEO — seems crucial. Lucas: It is. The family's job is to preserve the family's wealth and values. The operating CEO's job is to run the business. When those two roles get conflated, you end up with family feuds and bad business decisions. The Peugeot model keeps them separate but aligned. Luna: So what's the one thing a family business owner should take away from this story? Lucas: I think it's this: control is a means, not an end. If holding onto control destroys the business, you've lost both. The Peugeot family was willing to give up nominal control to keep the business alive, and then they patiently rebuilt their influence. That takes humility, discipline, and a very long time horizon. Luna: And a willingness to trust a non-family leader. Lucas: Absolutely. Tavares was the right person at the right time. But the family also had the wisdom to get out of his way. That's harder than it sounds. Luna: Alright. So next time someone tells you that family businesses can't survive a crisis, you've got the Peugeot story. Lucas: Two hundred years and counting. And still driving.