Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Peugeot Family Survived a Century of Car Industry Turmoil
Transcript
- Lucas: If you ask someone to name a family-run car company that's lasted more than a century, they'll usually say Ford. Or maybe Toyota. But there's a French company that's been making cars since 1890, run by the same family for seven generations, and it's now the second-largest automaker in Europe. Luna: You're talking about Peugeot. And I think most people don't realize that the family still has real control, even after the Stellantis merger. Lucas: Exactly. Peugeot started as a steel foundry in 1810, making saws and coffee mills. Then they moved to bicycles in the 1880s, and finally to cars in 1890. The family has been at the helm through wars, nationalizations, near-bankruptcy, and one of the most complicated mergers in automotive history. Luna: So how did they keep control when so many other family automakers—like Chrysler or Fiat—lost it? Lucas: A big part of the answer is the holding company structure. In the 1920s, the family created a holding company called Établissements Peugeot Frères, which held the shares of the various Peugeot businesses. This allowed them to separate ownership from management and bring in outside capital without losing control. Luna: So it's a bit like how the Wallenbergs use Investor AB to control their industrial empire. Lucas: Very similar. The holding company owns a minority of shares but a majority of voting rights through a loyalty bonus system. Today, the Peugeot family controls about 22 percent of the voting rights in Stellantis, even though they own less than 10 percent of the equity. Luna: But it almost fell apart, right? In the 1970s, Peugeot was in serious trouble. Lucas: Yeah, the 1970s were brutal. Peugeot had acquired Citroën in 1974, which was a disaster—Citroën was losing money and had a weird product lineup. Then they bought Chrysler's European operations in 1978, which gave them three brands that didn't fit together well. By the early 1980s, the company was losing billions of francs. Luna: That's when the family brought in a non-family CEO, Jacques Calvet, and he launched the Peugeot 205. That car saved the company. Lucas: The 205 was exactly what they needed. It was a small, reliable, stylish hatchback that competed with the Volkswagen Golf and the Renault 5. It became the best-selling car in France and turned the company around. By 1987, Peugeot was profitable again. The family had the humility to bring in an outsider when they needed a fresh perspective. Luna: That's a pattern in successful family businesses: knowing when to step back and let professionals run the show. Lucas: Right. And the Peugeot family did that repeatedly. After Calvet, they brought in another non-family CEO, Jean-Martin Folz, and then Christian Streiff. The family members often served on the board but didn't run the day-to-day operations. That's a key lesson: you can maintain control without micromanaging. Luna: But then in 2008, the financial crisis hit, and Peugeot was in trouble again. They had too much debt and not enough sales. Lucas: That crisis almost killed them. By 2012, Peugeot was losing billions of euros and had to be bailed out by the French government and a Chinese partner, Dongfeng. The family's stake was diluted to about 14 percent. Many people thought the family would lose control entirely. Luna: But they didn't. How? Lucas: The family restructured their holding company, created a new entity called FFP, and convinced the board to adopt a loyalty voting system that gave them more voting power. They also brought in Carlos Tavares as CEO in 2014. Tavares was a former Renault executive who had a reputation for cutting costs ruthlessly. Luna: And he turned Peugeot around again, cutting costs and making the cars more profitable. Lucas: He did. By 2015, Peugeot was profitable again. Then Tavares orchestrated the acquisition of Opel from General Motors in 2017, which was another risky move, but it worked. And then, in 2021, the merger with Fiat-Chrysler to create Stellantis. Luna: So the family went from near collapse to controlling one of the world's largest automakers. That's an incredible comeback. Lucas: It really is. And the family's role in the Stellantis board is a good example of how they balance control and delegation. They have three seats on the board, but they don't interfere with operations. They focus on long-term strategy and making sure the company stays independent. Luna: And they have a family constitution, right? That's become common among multigenerational family businesses. Lucas: Yes, the Peugeot family has a written constitution that governs how family members can join the company, how they can sell shares, and how disputes are resolved. It's designed to prevent the infighting that destroys many family businesses. For example, family members who want to work at Peugeot must have a relevant degree and work outside the company for at least two years first. Luna: That's smart. It ensures that only qualified family members can rise to leadership positions. Lucas: Exactly. And the constitution also includes a 'family council' that meets regularly to discuss the business and family matters. This keeps everyone informed and reduces the chance of surprises. Luna: One thing that stands out to me is that the Peugeot family is not as famous as the Fords or the Toyotas, but they've been in business longer, and they've survived more near-death experiences. Lucas: That's true. They've been around for 210 years, and they've adapted from steel to bicycles to cars to a global conglomerate. The key seems to be a combination of financial discipline, a willingness to hire outsiders, and a governance structure that keeps the family united. Luna: And a little bit of luck, too. Lucas: Sure, luck always helps. But you make your own luck by being prepared. The Peugeot family had the holding company structure ready when they needed to raise capital without losing control. They had the constitution ready to prevent family feuds. They had the humility to bring in Tavares when they needed a turnaround artist. Luna: Speaking of which, I think it's worth noting that the Peugeot family's story is a reminder that family businesses can compete with the largest corporations in the world, as long as they're willing to evolve. Lucas: Absolutely. And that's a lesson that applies beyond the auto industry. Luna: Hey, before we wrap up, I want to mention something. If these kinds of business stories have been useful to you in your work or investing, a handful of listeners already chip in monthly on buy me a coffee dot com slash fexingo. It's what keeps this show ad-free and focused on the details. Lucas: Yeah, it's a small group, but it makes a big difference. No pressure, just if you find value in what we do. Luna: Alright, back to Peugeot. So we've talked about the past, but what about the future? With the transition to electric vehicles, how is the family positioning the company? Lucas: That's the next big test. Stellantis has committed to investing 30 billion euros in electrification by 2025, and they've launched several electric models under Peugeot and other brands. But the competition is fierce, especially from Tesla and Chinese automakers like BYD. Luna: And the family's approach seems to be to trust Tavares and his team, but keep a close eye on the numbers. Lucas: Exactly. The family has been through multiple technological transitions: from steam to internal combustion, from carburetors to fuel injection, from gasoline to electric. They know that the company has to change or die. And so far, they've shown they can adapt. Luna: So the Peugeot story is still being written. But the foundation they've built—the holding company, the constitution, the family governance—gives them a good chance of surviving another century. Lucas: I think so. And that's what makes family businesses fascinating: they think in generations, not quarters. The Peugeot family is thinking about what the company will look like in 2050, not just next year. Luna: That's a good note to end on. Thanks, Lucas. Lucas: Thanks, Luna.