General Motors (GM) is in advanced discussions to buy a small stake in French automaker PSA Peugeot Citroen as part of their proposed strategic alliance in Europe and elsewhere, sources familiar with the situation said. Under the terms being discussed, GM would likely buy a stake of less than 5 per cent in Peugeot, the sources said. Any purchase by GM would be “purely symbolic” to cement the commercial alliance, one of the sources said, adding that the size of the stake would be “in that region.” At Peugeot’s current market value of $4.8 billion, a 5 per cent stake would be worth $240 million. A deal could be announced in the next few days, although sources warned that an agreement has not been reached and talks could still fall apart. A GM spokesman declined to comment. A Peugeot spokesman did not immediately return calls and messages seeking comment. GM and Peugeot are discussing a broad strategic alliance designed to stem losses in Europe and cut production costs elsewhere, people familiar with the matter said last week. For GM, an alliance would provide a means to lower operating costs at its loss-making European unit, Opel, while Peugeot would gain much-needed access to international markets at a time when auto sales in Europe are sagging, sources said previously. Peugeot, which is heavily reliant on the French and European markets, has been under pressure to find a partner to broaden its presence around the world and gain access to growth markets like Latin America, China and Russia. “The challenge for Peugeot is that it’s not in the US market, one of the world’s largest, and its presence in China is growing but still small. It’s too reliant on its home market, which is shrinking, at least in this economy,” said one industry banker who declined to be identified because he was not authorized to speak with the media. But the plan has met with some skepticism in the United States, with industry experts and analysts saying that for GM, the potential benefits from such an alliance are less clear. Peugeot would bring well-regarded diesel engine and small engine technology to the table, but it is grappling with the same problems that Opel has and does not help GM outside Europe, analysts said. “Frankly we believe it will introduce complications at a very delicate time in its own restructuring,” Guggenheim analyst Matthew Stover said last week. “In the grand scheme of things, GM has much more to offer PSA than the other way around.” Sources close to the talks said that while both sides expect cost savings from sharing vehicle platforms and technology, Peugeot wants this alliance more than GM does. Analysts said that an alliance with Peugeot would allow the companies to pool together resources to develop vehicles but it could take a decade to fully realize the benefits of the pact. They also said more steps would be needed to overcome the core problem for both automakers in Europe: overcapacity. The European auto market has long been plagued by too much capacity, cutthroat price competition and paper-thin margins. Those structural issues have been compounded by the recent debt crisis, which has hurt consumer confidence and caused many would-be car buyers to pull back on their spending. Opel is one of the key concerns for GM investors. In 2009, the automaker’s then-CEO Ed Whitacre scotched a planned sale of the unit. Last year, GM lost $747 million in Europe and Morgan Stanley analysts value Opel at negative $8 billion. GM Vice Chairman Steve Girsky has taken charge of the Opel restructuring, and GM said this month that it would detail further steps soon. Any stake investment in Peugeot would have little impact on the balance sheet of GM, which ended 2011 with $37.5 billion in liquidity. Peugeot Chief Executive Officer Philippe Varin said this month that the company was willing to investigate partnerships as long as they were in line with the group’s strategy, which includes expansion outside Europe, and contributes synergies while maintaining Peugeot’s independence. From gulftoday
GMT 21:01 2018 Tuesday ,09 January
End of the internal combustion engine, part 3: the age of the electric vehicle beginsGMT 06:10 2018 Saturday ,06 January
Business Extra podcast: Supercars in the UAE - what's driving the trend?GMT 16:48 2017 Friday ,24 November
Tesla unveils new semi-truck, new Roadster sports carGMT 18:28 2017 Friday ,22 September
Review: BMW 540iGMT 07:59 2017 Tuesday ,01 August
Tesla delivers first Model 3 carsGMT 05:13 2017 Wednesday ,05 July
Tesla's budget car is finally on the wayGMT 02:37 2017 Wednesday ,28 June
718 Cayman S: Superstar SportscarGMT 21:42 2017 Saturday ,03 June
Car manufacturer Toyota is working on a 'flying car'Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor