Growing increasingly desperate after watching another 13% sales drop last month, inside leaks suggest French automaker PSA Peugeot Citroen is looking for a bailout from the French government.
The troubled automaker denies the reports, however, this could be the first step in the negotiation process between Peugeot executives and the new French government, which appears highly unlikely to let the company flounder as the European recession spreads and eats into the automotive business across the continent.
The reports also illustrate the underlying weakness of General Motors plans for fixing Opel, which leans heavily on forging a PSA-Opel alliance.
GM paid $400 million for a 7% stake in Peugeot earlier this year and is already turning to PSA for assistance in repairing its floundering European operations, which are steadily losing market share and piling up red ink. The losses at Opel are now expected to color GM’s second quarter earnings report, which is due August 2.