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Peugeot looks east to discuss auto alliance with Dongfeng
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Loss-making French carmaker Peugeot took a further step eastward yesterday in its fight out of a financial crisis, saying clearly that it was in talks with Chinese giant Dongfeng about a possible shareholder tie-up.
An eventual tie-up would give PSA Peugeot Citroen a much-needed cash injection.
It would also cement its relationship with China’s second-biggest car maker — which recently sealed a joint venture with rival French auto group Renault.
Meanwhile Peugeot also flagged a downward revision of the ambitions of an alliance it has made in Europe with US-based General Motors.
Peugeot, known as PSA Peugeot Citroen, already has a joint venture with Dongfeng in China to make cars, but the latest statement raises the prospects of a much deeper capital tie-up.
Reports in recent months have hinted at a sharp reduction of the holding of about one quarter of the shares controlled by the French Peugeot family, but that French interests, possibly involving the French state, would retain a controlling interest.
Peugeot, the second-biggest carmaker in Europe after Volkswagen of Germany, and the biggest in France, stressed however that there had not been any agreement on a tie-up and that the talks were at a preliminary stage.
Nevertheless, the group — an important player in the French industrial sector — said in a separate statement that its minority shareholder GM would give its blessing to any such deal.
These new signals about the outlook for Peugeot in China and also in Europe involve a chessboard of auto interests touching on GM and its troubled European branch Opel, on Renault and on the ambitions of Dongfeng.
GM, which holds about 7 percent of the French group but is also a big player in the Chinese market, would “vote any PSA shares it would hold in favor of any such transaction” for a new stakeholder in Peugeot, the French carmaker said.
However, GM has just said it is to abandon its efforts to position its Chevrolet brand in Europe, and yesterday Peugeot said the two allies were shelving a project for a joint platform for small cars.
Dongfeng, for its part, had said that it was studying the rationality of the possible capital increase.
Earlier in December, Dongfeng and Renault unveiled a US$1.3-billion joint venture which includes the production of 150,000 multi-purpose vehicles and engines a year.
The Dongfeng group, including its joint ventures, sold 3.08 million vehicles in China last year, according to industry group China Association of Automobile Manufacturers, giving it around a 16 percent market share.
Western automakers have been looking beyond Europe and the US for growth as sales in their home markets have collapsed amid a series of economic crises.
China, with its forecast potential to grow to a automobile market of 22 million units by 2020, is a natural magnet for these groups.
Yesterday, Peugeot said it would have to write off about 1.1 billion euros from its full year earnings.
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