PARIS (Reuters) -- PSA/Peugeot-Citroen's biggest shareholder, the Peugeot family, wants CEO Philippe Varin and his management team replaced because of a fall in sales and dissatisfaction over its alliance with General Motors, French newspaper La Tribune reported on Wednesday.
The Peugeot family controls 25.2 percent of the company's capital and 37.9 percent of its voting rights through the Societe Fonciere Financiere et de Participation (FFP) holding.
Peugeot's supervisory board issued a statement saying it supports Varin and his strategy.
“Following rumors that have appeared today in the press the entire Supervisory Board of PSA Peugeot Citroen wishes to express its complete support for Philippe Varin and the Managing Board and also for the current strategy that is in place,” the board said in a statement released after European markets closed.
Varin took over as CEO in 2009 with the aim of expanding PSA's international footprint and moving its Peugeot and Citroen brands upmarket.
But after a year and a half of solid sales, lifted by the success of the Peugeot 3008 crossover and Citroen DS models as well as government scrappage incentives, the company's business began to slide, dragged down mainly by struggling European markets.
This prompted PSA to seek an alliance with General Motors earlier this year, with General Motors becoming PSA's second-largest shareholder with a 7 percent stake.
PSA, which is heavily exposed to European markets suffering under the region's debt crisis, is trying to make big savings through restructuring its operations after net debt at the carmaker increased to 3.4 billion euros at the end of 2011.
As part of this restructuring program, the automaker is targeting 1,900 voluntary job losses in France from a total of 6,000 layoffs in Europe and has embarked on a range of money-raising efforts in 2012 that include the sale of its 48-year-old headquarters building and the issue of 1 billion euros in shares at a 42 percent discount.
In the first five months, PSA sold 675,323 cars in the EU and EFTA countries, down 14.9 percent from the same period a year before, according data from industry association ACEA.
Sources: Reuters and Automotive News Europe