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PSA Peugeot Citroen Reportedly Seeking Government Bailout

Meltdown at French automaker spells problems for partner General Motors.

by on Jul.10, 2012

The Peugeot HR1 battery car concept. Peugeot itself now needs a charge-up.

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.

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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.


GM May Take 7% Stake in France’s Peugeot

Proposed alliance unlikely to resolve GM's Opel problem.

by on Feb.28, 2012

Will GM CEO Dan Akerson approve an alliance with PSA Peugeot-Citroen?

General Motors could take as much as a 7% stake in French automaker PSA Peugeot Citroen as part of a new alliance the two manufacturers are putting into place.

The alliance is expected to involve a variety of different areas of business, notably including joint vehicle and powertrain development, according to knowledgeable sources.  The key goal for both manufacturers would be to improve their economies of scale, especially in Europe, where GM last year lost $747 million.  But whether the proposed alliance will help turn things around for GM’s red ink-stained Opel division remains to be seen.

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Peugeot is the Continent’s second-largest maker on a unit sales basis but has serious problems of its own, rising debt leading it to plan a 1 billion Euro ($1.34 billion) rights offering that notably could reduce the holdings of the founding Peugeot family.

Beyond possible cross-holdings, the alliance appears to focus on three areas, according to sources: (more…)