PSA Peugeot Citroen has confirmed it is talking potential cooperations and alliances but has not not named possible partners though media reports said it was in advanced discussions with General Motors.
French online newspaper LaTribune.fr, citing an unnamed source, reported late on Tuesday (20 February) that PSA was in advanced alliance talks with GM although no agreement had been reached, according to Reuters.
Go deeper with GlobalData
Meanwhile, the Financial Times online said PSA and GM were in advanced talks about an alliance that would see them join forces to build cars and components in Europe.
The partnership, if concluded, would see Peugeot and GM’s loss-making Opel/Vauxhall unit jointly develop engines, transmission systems and entire vehicles that would be sold under their respective brands, two people familiar with the plan told the FT.
Reuters noted that the media reports pointed to an alliance beyond a production partnership but not a merger of the companies.
“In the context of its globalisation strategy and improving its operational performance, PSA Peugeot Citroen looks at potential cooperations and alliances,” the company said in a statement issued on Wednesday (22 February).
“Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement.”
No one at PSA was immediately available for further comment when contacted by Reuters.
“We routinely talk to others in the industry but have no comment beyond that,” GM spokeswoman Kelly Cusinato told the news agency.
LaTribune.fr said PSA discussions with GM began several months ago and go beyond specific production partnerships of the kind PSA already has with automakers including Ford, Toyota and BMW, Reuters reported, adding that the paper had noted any deal would have to be approved by the Peugeot family, which holds 30.9% of the French automaker’s share capital and 48.3% of voting rights.
If an agreement is reached, it could be announced at the Geneva motor show in early March, the French report added.
Reuters also noted that PSA and GM’s European Opel division both face heavy restructuring to reverse losses that have been compounded by the region’s slumping car market, industrial overcapacity and cut-throat price competition.
Peugeot and GM’s alliance would not be a merger and would be unlikely to involve an exchange of shares, sources told the Financial Times. Both companies have also been talking to other carmakers as they seek ways to restore their European operations to profitability, the paper added.
The FT said PSA chief Philippe Varin visited GM’s headquarters in Detroit in January for a dinner of industry chief executives on the sidelines of the city’s motor show.
The report said Peugeot has been on the hunt for a partner since 2009, when Thierry Peugeot, the company’s chairman and head of its controlling shareholder family, said the group would be open to an alliance under certain conditions, including holding on to its position as the company’s dominant shareholder.
Peugeot last week reported a loss of EUR497m in the second half of 2011 in its core automotive division and disclosed that it had burned through EUR1.6bn of cash last year.
GM last week reported that its Opel unit lost US$747m in 2011 and said that it was drafting a new strategy to run the division at a lower break-even point to reflect the worsening European market, the FT said.
The ‘pink paper’ suggested a tie-up between Peugeot and Opel would make strategic sense as their operations do not greatly overlap. Peugeot has the bulk of its car plants in France and southern and central Europe, while Opel’s are in Germany, and the north.
There are also separate car and van plants in England.
Peugeot already cooperates with several rivals, including BMW, Mitsubishi Motors and Toyota, on individual engines, cars or plants, but, until now, has balked at casting its lot too closely with a single partner, the FT said.
Over the past three years, it has held talks on possible alliances with Fiat and Mitsubishi, which ended inconclusively, in part because of the family shareholders’ reluctance to cede control.
Peugeot has a cunning plan, GM battles on with Opel
PSA sharpens axe after disappointing 2011 result
General Motors books $700m loss in Europe for 2011
Toyota, PSA cut Czech JV output
