LOOKING AT Armand Peugeot and how the company he founded 100 years ago behaves today, a phrase from a Frank Sinatra song springs to mind: "I did it my way."
PSA/Peugeot-Citroen appears to have it in its genes to go against the trend. It does things that the rest of the industry feels are silly or hazardous. That's how Armand Peugeot's family felt about his enthusiasm for motorized boxes on wheels.
Armand, who enters the European Automotive Hall of Fame in Geneva next month, had to convince his powerful industrial family that the car industry was more than just a fad.
Meanwhile, PSA's success in the past few years has been in winning over its peers, just as Armand Peugeot's cousins and nephews - he had no son to take over the business - embraced the car business in his wake.
First there was PSA's obstinacy in shunning the mergers and costly acquisitions its competitors made in the 1990s to become global.
It was not for PSA to buy a distressed east European carmaker after the fall of the Berlin Wall, or a luxury-car maker to jazz up its image.
Instead, PSA kept to its two volume brands, Peugeot and Citroen, whose cars are in about the same price bracket, with about the same brand premium. It looked like a recipe for disaster and yet both brands have increased sales by 55 percent in the last five years.
Another PSA idiosyncrasy is its policy of retaining peripheral activities that competitors have long cast off. While everyone was "focusing on core business" and selling non-core assets, PSA has kept components maker Faurecia and logistics company Gefco. It even boosted its stake in Faurecia to more than 70 percent two years ago to help it acquire Sommer-Alibert, a plastic components maker. PSA has been helping the units develop so they don't have to rely on PSA business.
Because PSA knew it could not do everything by itself, it entered cooperation agreements with carmakers as diverse as Renault, Fiat, Ford, Toyota and BMW. The agreements involve very specific projects, be it co-developing a small engine as with BMW, or a small car as with Toyota. The diversity in those alliances shows PSA is anxious not to become overly dependent on any of its partners.
While most carmakers have been retrenching in expectation of a European market slowdown, an unflappable PSA is adding 500,000 cars a year in new capacity, starting in 2005. They will be built in two greenfield plants in eastern Europe.
PSA was plucky, too, when sticking to diesel in the early 1990s. It braved strong pressure from environmentalists who saw diesel emissions as a health hazard.
Rather than caving in, PSA instead worked on improving its green credentials. It was one of the first carmakers to launch common-rail engines that pollute less than older generation diesels. It also became the first carmaker to fit its diesel engines with filters to reduce soot particulates. Ford will soon equip its cars with this technology.
PSA's great characteristic, however, is the staying power of its founding family. The Peugeot family is the longest-serving in the car industry. Armand created his car venture in 1895 while Fiat's Agnellis showed up only in 1899, the Fords in 1905, the Toyodas in 1935 and the Hondas in 1962.
The Peugeot family has succeeded in remaining PSA's main shareholder while most descendants of the industry pioneers had to cede control. They could not keep up with the demand of this hugely capital-intensive industry. In fact, the Peugeots have been steadily increasing their stake within the company in the past few years.
To this day, the family is quietly influencing PSA's strategy as the supervisory board is traditionally headed by one of its members. It is now chaired by Thierry Peugeot, who replaced his father Pierre at the end of last year. In Thierry Peugeot's own words, this longevity "gives PSA a stability and a durability that allow long-term strategic planning." In a business world littered with fallen angels, that may be Peugeot's greatest originality, one uncle Armand would not have disavowed.