Reuters reports PSA-Citroen is rapidly running out of operating capital, meaning drastic action is required

The Peugeot family, founders of PSA Peugeot Citroen, could step back to let GM take over the ailing business. City sources have already warned that PSA could get close to not having enough free cash to run the business by the end of 2013.

A report from news agency Reuters suggests that if GM were to take control of PSA it would want to shut down factories and make redundancies in France and Germany, something the French government is unlikely to let Peugeot family do in its home market. 

Peugeot is reported to have sought finance for the business elsewhere, but a lack of willing bidders has forced it to turn to GM, which owns seven per cent of the current business. The move was made with the support of current PSA Chief Executive Phiippe Varin, reports Reuters.

A similar bid to sell a substantial stake to a consortium led by Dongfeng Motor Group has already fallen through.

Overall the Peugeot family owns a 25.4 per cent stake in the company, but controls 38.1 per cent of the voting rights.

Speaking to Reuters, sources close to the ongoing discussions said: “The Peugeot family has now accepted that they'll lose control.

“PSA will need to present a new industrial plan for people to underwrite a capital increase, and the only hope is GM. They (GM) are ready to inject more money if they can control the business, integrate Peugeot and Opel and rationalize production.” Peugeot, which is heavily reliant on sales in its home territory, is fighting for survival according to the report.

GM bought 7 per cent of PSA in February 2012. Since then, the French Government stepped in with financial aid for Peugeot's own bank, ensuring it could still offer competitive finance to new car buyers.

The deal now hinges on GM. Sources say GM bosses need assurances that they would be able to cut plants and jobs “at reasonable cost.”  

Widespread cuts in France, which would be almost certain under GM control, would be fiercely resisted by President Hollande's government. However, the French Government is said to understand that in order to return to profit Peugeot either needs to seek a larger tie-in with GM, or seek a similar deal with another industry partner. Peugeot, which employs 77,000 workers in France, has already mothballed its production plan in Aulnay and is scaling down production elsewhere.

Autocar noted last year that in bailing out PSA, the French government might have harmed long-term deal prospects.

Neither Peugeot nor GM has commented on the story.

 

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44

27 June 2013

That's where they went wrong. It was bound to end in tears, but would they listen? When Chrysler tried to palm them off with bits of the Rootes Group the French should have turned around and walked away. 

 

27 June 2013

The over capacity was sustainable in a buoyant market, but with European sales at a 20-year low this sort of merger is inevitable. PSA got shot of its Rootes roots (UK manufacturing) long before the current difficulties. 

27 June 2013

Hmmm ... So they have zero cash yet spend money on a pikes peak racer project which must have cost a couple of million, the car the developement , loebs high priced fee...clever bunch at psa

27 June 2013

Bobstardeluxe wrote:

the pikes peak racer project which must have cost a couple of million

You could class this as advertising?

Anyway, it may be a vote loser but surely the French government has to let PSA find its own way with GM and shut factories. Propping it up piecemeal at the 11th hour is just prolonging the inevitable, longer term the prospect of no PSA at all - if nothing is done - is going to lose more votes..?


27 June 2013

I wish it were otherwise but Peugeot Citroen have no identity distinction as between themselves, have poor quality and reliabily reputations and trade only, it seems, on price and discounting. Personally, nothing that they offer looks attractive. Who would buy a French car these days other than on price? Problem is, GM hasn't yet pushed Opel/Vauxhall upmarket enough  in the market's perception, to have the appeal of Buick so it still isn't sufficiently distinguished from Chevrolet and Holden, that are more in Peugeot territory. With European-selling brands like Vauxhall, Opel, Chevrolet, Peugeot and Citroen, not enough has been done to segment so they just steal market share from the same segment.

GM, it seems to me, needs to operate at three clear and distinguished levels, maybe:

Chevrolet/Holden/Peugeot = Seat/Skoda

Buick/Vauxhall/Opel/Citroen = Volkswagen

Cadillac = Audi

Still too many brands, without the cleverness and success of the VAG Group

27 June 2013

It will be a sad day if it comes to it, but its been easy to see something like this coming for ages.

During the last decade they replaced the very 406 which sold very well with the rather poor 407, and worse still replaced the well regarded 306 with the 307, and worse still we still have the 307 (OK its called the 308 these days, but its still the same crap car underneath). 

As someone who has owned and driven a Peugeots for most of the last 20 years they now hardly make anything with any appeal. I was tempted with a 208 gti, but they arent flexible enough to make it without that bloody awful drug dealer dark tinted rear glass, and that was enough to stop me.

To survive they have to make cars the public want, at a price they will pay, and still make a profit.  Not easy i know, but if you look at the last 10 years its the perfect example of how not to do it!

27 June 2013

if Peugot/Citroen were to disappear from the market. The French government (not just the current one) seems to have been interferring in their car makers destinies for far too long (shades of BL in the 70s ?); they need to step back and face reality, let the company sort out its own future and if that means a merger with a stronger partner and closure of factories and loss of jobs, so be it, however tough it maybe. At least the French seem willing to buy cars from their domestic makers, unlike the situation in many other markets where imports dominate the sales charts. One just hopes that if GM take control, they allow Peugeot and Citroen, in particular, to continue to produce the distinctive cars that they are now beginning to produce again. Good luck to them all anyway.


Enjoying a Fabia VRs - affordable performance

27 June 2013

Just hope they don't take GM down with.  I'm not even sure why GM would want to keep afloat, along with the Frennch goverment, a below average car maker with a shrinking market share.

 

Hydrogen cars just went POP

27 June 2013

Well a tie up with GM will see the end of PSA just like it was to Saab, and Subaru have never recoved from their short lived relationship. expect to see Citroen or Peugeot badged Chevys (Daewoo's) coming to a dealer near you soon. 

28 June 2013

Citytiger wrote:

Well a tie up with GM will see the end of PSA just like it was to Saab, and Subaru have never recoved from their short lived relationship. expect to see Citroen or Peugeot badged Chevys (Daewoo's) coming to a dealer near you soon. 

It pays not to be too Eurocentric:

http://www.subaru.com/company/news/index.html

June 2013 - subaru US sales best in company history.

Where has all Japanese design went to?

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