PSA Peugeot Citroen may have to raise funds through a share sale as it burns through cash in a weak market, sources told the Reuters news agency.
Peugeot has been booking losses of up to EUR200m (US$257m) a month and does not expect a return to profit until 2015. It has said a share sale is not on the agenda.
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But sources told Reuters Peugeot’s financial situation has deteriorated to the point it would need to raise cash in coming weeks or months and a capital increase or asset sales were possible.
PSA has been hit harder than many European rivals following a plunge in car sales in the region partly because it makes fewer sales in faster-growing emerging and luxury markets. The group is cutting thousands of jobs and closing its Aulnay plant near Paris.
A La Tribune website report which said PSA was considering a new cash call after burning through EUR2.5b (US$3.2bn) in the past year prompted a denial from the company.
A PSA spokesman noted the carmaker had EUR7.3bn (US$9.4bn) in cash reserves and EUR3.2bn (US$4.1bn) in undrawn lines of credit at the end of last year.
The Peugeot family owns 25% of the company and 38% of voting rights. General Motors has a 7% stake in PSA and has said it has no plans to put more cash into the automaker.
In February, GM wrote down US$220m, or about half, of its investment in its French alliance partner. It originally paid US$423m for its stake.
One source told Reuters PSA could also look at selling its 57% stake in parts supplier Faurecia though he added there were not many potential buyers.
