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Troubled Peugeot Selling 30% Stake to Chinese Partner

Move could short-circuit French maker’s alliance with GM.

by on Oct.09, 2013

Peugeot's next 508 could have a much more significant Chinese influence if a proposed deal with Dongfeng goes through.

Floundering French automaker PSA Peugeot-Citroen may soon be getting a new accent, reports from China suggesting one of the booming Asian nation’s larger domestic manufacturers, Dongfeng Motor, is set to purchase a 30% stake in Peugeot for about $1.6 billion.

But the proposed deal could create some problems on a global scale.  Among other things, it might short-circuit the relationship Peugeot has already established with General Motors. And it could prove problematic considering Dongfeng is already partnered with the French maker’s rival, the Renault-Nissan alliance.

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PSA Peugeot-Citroen has been one of the automotive manufacturers hardest hit by the ongoing European recession.  It lost more than $6.5 billion last year and remains deep in the red for at least the first half of 2013.  The maker has already said it will close one key plant in an effort to cope with worsening capacity utilization issues – despite strong resistance from the French government.

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Peugeot Looks to GM as Potential White Knight

GM plays hard-to-get after past alliances all floundered.

by on Jun.28, 2013

Despite the addition of new products like the 3008 diesel-hybrid, Peugeot continues to stumble as the European slump drags on.

After more than 200 years in control of the company that still bears its name, the Peugeot family appears willing to cede control of PSA Peugeot Citroen in a bid to attract a white knight to rescue the fast-failing French automaker.

And with several potential partners, including Chinese carmaker Dongfeng, showing a notable lack of interest, Peugeot CEO Philippe Varin is now sounding out General Motors, according to several reports from Europe.  GM and Peugeot announced an alliance in early 2012 that the makers claimed would save them billions of dollars over the coming year through common purchasing, parts production and other efforts. But the proposal coming from the French maker would take things a significant step further.

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Like Peugeot, GM has been hard hit by the European economic crisis and recently announced the latest in a series of turnaround plans for its Continental operations – which have lost more than $16 billion in 13 consecutive years of red ink – including $1.8 billion in 2012. But with European car sales now dipping to their lowest levels in two decades, analysts are skeptical about how quickly it will be able to implement that plan.

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Peugeot Drops $6.7 Bil for 2012

Debacle raises new concerns about alliance with GM.

by on Feb.13, 2013

Peugeot's Onyx Concept at the Paris Motor Show. The maker is hoping to rebuild demand with new product.

Hammered by plunging sales and massive excess capacity, struggling PSA Peugeot Citroen has revealed it lost €5.01 billion, or $6.74 billion, last year raising further concerns about its long-term health – and about the viability of a partnership the French automaker has formed with General Motors aimed at turning around both of their troubled European operations.

The heavy loss – compared with a €588 million profit for 2011 — is compounding concerns that the French government might move to take a stake in Peugeot, the country’s dominant automaker. The new Socialist administration is already on the hook for a €7 billion guarantee it approved last year for the car company’s financial services arm.

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European car sales have continued plunging as Continental bureaucrats struggle to solve a nagging financial crisis, hitting their lowest level since 1995 last year. Most makers have taken a hit, some slipping deeply into the red, but none as sharply as Peugeot.  Compounding the maker’s problems has been a significant increase in steel and other raw materials and components.

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New French Pres. Rips Peugeot Bailout Plan

Potential problem for partner GM?

by on Jul.16, 2012

New French Pres. Hollande says "Non!" to Peugeot's plan to close an excess plant.

French President Francois Hollande wasted no time ripping into PSA Peugot Citroen’s plans to close a major assembly plant north of Paris as part of a turnaround plan expected to be used in seeking a government bailout of the ailing automaker.

The new leader, who took the Socialist Party back into power, took a distinctly different position from industry analysts and press pundits.  With rare exception, they had immediately hailed Peugot’s announcement last week as the long-awaited start of the restructuring of the European auto industry.

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The Continent has seen a four-year slide in automotive sales and though there is near universal agreement that Europe has far too much production capacity manufacturers have, until now, been unwilling to make the first cuts.

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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.

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GM – Peugeot Announce “Broad-Scale” Alliance

Partners anticipate improved European competitiveness.

by on Feb.29, 2012

The new partnership brings "tremendous opportunity" for both companies says GM CEO Dan Akerson.

General Motors and PSA Peugeot Citroen have confirmed the creation of a “long-term and broad-scale” strategic alliance they expect to contribute to improved profitability and competitiveness, especially in the weak European market where both makers have been struggling.

As part of their new partnership GM will take a 7% equity stake in the French manufacturer, becoming the second-largest shareholder in PSA after the founding Peugeot family, which will continue to hold a one-third stake in the firm.

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“This partnership brings tremendous opportunity for our two companies,” said Dan Akerson, GM CEO and Chairman. “The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe.”

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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…)

GM in Alliance Talks With PSA Peugeot Citroen

Makers discussing “cooperations and alliances.

by on Feb.22, 2012

Does GM CEO Dan Akerson see a partnership with PSA as a way to solve Opel's problems?

General Motors and PSA Peugeot Citroen have confirmed they have begun discussing “possible cooperations and alliances.”

Both makers cautioned that their talks are still too early to discuss in detail, though industry sources are indicating that the U.S. maker, the world’s largest, and French-based PSA, Europe’s second-largest automaker by sales, are focusing on a manufacturing alliance – though some sort of joint product development could be in the cards, as well, other sources suggested.

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Such a move could be critical for GM, which is struggling to staunch ongoing losses at its German-based Opel subsidiary.  Despite hopes that its European operations would be back in the black, GM suffered a $700 million loss in 2011, raising concerns about the company’s prospects despite a record global profit of $7.6 billion for the year.

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