Industry News: Rumorpile: Peugeot Family To Give Up And Cede Control To General Motors

[William Maley]

William Maley

Staff Writer - CheersandGears.com

June 28, 2013

Here's a story that we're filling under the 'wait and see' file. Reuters is reporting that the Peugeot family, which currently owns a 25.4-percent stake in PSA Peugeot-Citroën automaker and 38.1 percent of voting rights is willing to give up its stake and try to revive a tie-up with General Motors.

"GM faces the same overcapacity situation with Opel, and that's why PSA is trying to convince them to merge the two. The Peugeot family has now accepted that they'll lose control, so this is no longer an issue," said a person familiar with the matter.

How dire is PSA Peugeot-Citroën at the moment? Well the two brands were the hardest hit in European sales slump and it looks like that trend will continue. Plus, the company could burn through all its assets by the end of this year if they don't get another injection of money and a groundwork plan.

GM CEO Dan Akerson told reporters last week that the company has no plans to put in more cash into PSA.

"We don't have any intention of investing additional funds into PSA at this time. If we see something changes, we'll evaluate that," said Akerson.

A source says that GM is playing hardball to get "...assurances that it would be able to cut plants and jobs at reasonable cost."

If General Motors did get control PSA Peugeot-Citroën, what would happen? The answer is a bit murky. But expect a number of plant shutdowns and laid-off workers to help save money. There is also talk about shared platforms between the two.

However, there lies a huge problem with this scenario. The French Government, which made a very controversial 7 billion euro investment into PSA Peugeot-Citroën's financial arm, would not approve of large-scale workforce reductions and plant closures in the country.

Source: Reuters

William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.

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[Drew Dowdell]

Check out the new Opel Corsa C3 208 at your local Opel-Citroen-Peugot dealer.

[G. David Felt]

I think even the French gov is going to have a hard time not accepting cuts. It is either cut plants and jobs of the over capacity or a total loss. They will be forced to make some hard decisions and Europe will burn.

[regfootball]

why "French Solutions" rarely are worthy.

[dwightlooi]

Well, then leave PSA to the Socialist French Government. If they believe that companies can and should exist to provide jobs and benefits rather than to make profit with jobs and benefits being incidental to that, then let them turn it into a welfare program and let it go down together with Socialist France.

[riviera74]

dwightlooi, I had to upvote you. PSA probably needs to die. Come to think of it, given Europe's car issues, GM should ditch Europe until all of the fallout truly hits and worms its way to its natural conclusion. Essentially, the USA went from several automakers to just four by Studebaker's death by bankruptcy in 1963. That consolidation took about three decades for that to actually finish. The problem with Europe is that they will not allow the badly needed consolidation required to salvage an auto industry in Europe at all, least of all the French and Italians.

Social Welfare states work well when you can sell products the whole world wants. Canada and Australia are great examples of this fact. Germany sells cars everybody wants (whether they can afford it is another story.). France only has wine and cheese and tourism. Who would buy a Peugeot? PSA died in the USA back in the 80s and never returned.

dwightlooi is right. It is past time to let capitalism cleanse Europe's dysfunctional auto industry. (Yes, I believe GM and Ford should dump Europe immediately!)

[Drew Dowdell]

Well not Peugot, but I'd love to see Citroen survive and even return to the states. They'd sell the $h! out of their DS line, especially the DS4 and DS5, but the DS3 could do well here too. Add the C4 Aircross and you'd have a good starting lineup that American would just eat up.

Reference pics:

Citroen DS3

Citroen DS4:

Citroen DS5:

Citroen C4 Aircross