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.
Join the debate
Add your comment
PSA's problems are only the beginning for all....
Before I begin, I suggest everyone watch this video first about sustainable design, because it is very important regarding the future of our entire race > http://www.youtube.com/watch?v=ZpM0yv9xq60
In my opinion Peugeot's problems are indicative of inherent problems about our current economic system. Over-capacity of cars is one thing - but the limited money market and consumption model it was built on is also a major problem. With that many cars being produced not by just one manufacturer but by many right across the world.....we're coming to a point now that there are more cars than there are people who can afford to buy them. This is why PSA has its problems and why sales in France dropped 10% this year. Today it may be PSA, but tomorrow it would be GM and many others - when their markets are saturated they too will face the same issue PSA. This is because....the whole process is just unsustainable. Everybody wants a house, and everybody wants a car - but after the market has been saturated, where is that demand and money for new cars going to come from?
We don't realise it but our race is by its very actions, also quickly decimating the natural beauty and resources of Earth with our ideas about mass consumption/production economics and 'competition' with each other. Look at how many cars we are producing by our manufacturers where new models are 'only slightly tweaked' for every year, how much resources and energy it uses and consider how much natural resources we are going to be left with in the years to come for our future generations if ALL manufacturers do this.
The truth is we today, we need an overhaul of our entire economic system and approach not just to car manufacturing and over reliance on fossil fuels, but the whole way we approach development of new products and economics. If we create products with sustainable design built in (which reduces overall energy and resource use in the course of its lifetime from start to finish), and share technical know-how between nations on such designs and energy-use, we have the capability to supply everyone on Earth with their needs without 'hurting each other'. But because we are choosing the model of profit and competition with each other, it is leading us down this path.
According to this article http://energyclimatetransportation.blogspot.hk/2011/03/fossil-fuels-how-much-is-left.html we only have less than 60 years before our global oil reserves completely runs out. We may be able to have our individual cars today, but once our fossil fuels run out in 60 years what then? Mass transit maybe our only option....
this sounds like a joke
After how those Americans proved over and over how clueless they are on really running a business. It seems ill-advised for the Frenchies to throw their company to the yanks. Oh well, it could end up like Saab or we could see Daewoo's rebadged as Peugeot's.
Thats a bit harsh, Jason, PSA
Thats a bit harsh, Jason, PSA used to make some of the best mainstream cars, theyve lost their way recently, but surely nothing and no-one deserves the fate of being bought by GM ? I mean, man thats low, would be better off just winding the company up than that.