After what has felt like a phoney war for much of the last couple of months, events at PSA Peugeot Citroen seem to be moving at an increasingly rapid pace.
Only last night (12 December) General Motors appears to have caught its erstwhile partner – former in a stake sense anyway – by surprise by announcing its unexpected exit from its 7% interest in the French automaker.
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PSA is putting a brave face on it, preferring to focus on common synergy savings such as purchasing, but GM’s move will surely have caused ructions in Paris.
It may be GM has seen the way the wind’s blowing with PSA’s apparent – unconfirmed – overtures to Chinese partner Dongfeng and is merely giving any new deal – including with the French government – a fair chance – but from a PR perspective it doesn’t exactly smack of a vote of confidence from Detroit.
Meanwhile, incoming PSA Peugeot Citroen CEO, Carlos Tavares, is going to have an extremely busy agenda once he gets his feet under the desk on New Year’s day in Paris and part of that is also going to feature getting to know the equally new boss at GM, Mary Barra.
In fact, his in-tray will be fairly overflowing with hugely pressing issues, such as the closure of the PSA plant at Aulnay, implementing the already-announced 8,000 redundancies and trying to re-establish the automaker on an even keel after burning through huge amounts of cash.
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By GlobalDataEqually, speculation refuses to go away the manufacturer could dispose of its 57% stake in supplier, Faurecia, while yet further talk has emerged, not exactly dampened by PSA it has to be said, the automaker could axe assembly from two lines to one at both its Mulhouse and Poissy plants following a study.
PSA has certainly teed up rationalisation at Mulhouse for some time, although Poissy seems to have caught people by surprise, but maybe the wound will be staunched following the pruning that could coincide with an uptick in the automaker’s fortunes.
“I think there is a relatively concrete plan for Mulhouse to cut capacity,” Metzler Bank automotive analyst, Juergen Pieper, told me from Frankfurt.
“Then it all depends how strong the recovery is and how good the models of the new Peugeot products [are]. I am not too pessimistic – in October you could see just a little recovery on the European market – at least they did not lose market share.”
The analyst expects PSA’s rebound to healthier times will take place “faster than people expect” with the automaker being a “surprising winner” in 2014 with for example its 308 brand.
So maybe the tough medicine is being administered now with a brighter future in mind.
PSA is looking have 100% utilisation of its factories instead of the current 73% across Europe and 64% in France, meaning it has virtually no option, not a stance the unions take of course, but to deliver some painful restructuring.
But if the Metzler analyst’s optimism is justified, why isn’t PSA articulating those sunlit uplands more than it is at the moment?
From a union perspective, these are very challenging times, although to be fair to PSA, it is undertaking to produce 1m vehicles by 2016 with no plant closures, as well as invest EUR1.6bn (US$2.2bn) during the period.
That optimism could well include tying up more with Dongfeng, which, in tandem with some involvement from the French government, could net anywhere between US$2.6bn and US$4bn, take your pick either way, it’s a fair amount of cash.
Again, estimates as to the stake Dongfeng could take range from Juergen Pieper’s assessment of 10%, to other reports raising the possibility of the French State and Dongfeng taking matching 20% stakes.
Enter the fray – once again – France’s fiery Economic Redevelopment Minister Arnaud Montebourg – who – if reports in the country are to be believed – is hailing any tie-up with Dongfeng to allow PSA to have one foot in the US with GM and the other in China with its existing partner.
Is France ideologically wedded to PSA? It’s a question I hear aired across Europe as pundits ponder whether the State could actually let one of its major automakers go.
Montebourg and his party hail from the left and intervention, whether through France’s State EUR7bn guarantee covering bond issues by Banque PSA Finance until December, 2016, or in the guise of the latest speculation in tandem with Dongfeng, is not something they seem to shy away from.
With events moving at such a rapid pace, the two new CEOs are going to have plenty to discuss when they first meet as heads of their organisations and why not at the Detroit Auto Show for a start?
