With GM’s European Opel/Vauxhall brands and PSA Peugeot Citroen losing money as well as market share fast, the two groups are looking for ways to make the best out of the alliance they formed on February 29.
Under the initial agreement, GM paid US$423 million (€326 million) for a 7 percent stake in its French partner, which made it its second-largest shareholder. The Detroit carmaker had stated, however, that despite the massive gains for both companies, it might be forced to write down its investment.
Reuters, citing sources that wish to remain anonymous, reports that the two groups are now discussing other options as well.
One of the sources said that the discussions started right after the formation of the alliance and includes “selling Opel to Peugeot, buying Peugeot’s automotive business or putting them all together in a new entity.”
A source familiar with General Motors told Automotive News Europe that if the plan goes ahead, the U.S. group would acquire a 30 percent stake in the joint venture. This would require pumping in an extra US$10 billion (€7.7 billion) due to the imbalance between the two companies revenue.
On the other hand, by doing so, GM would not have to consolidate Opel’s losses into its own results, which would remove the biggest obstacle in its overall performance.
“To the extent that GM is able to cut its losses in Europe or get another manufacturer to share some of their burden that would seem to make sense”, said New York-based analyst Brian Sponheimer.
One possible issue is the reaction of the French government, which is promoting itself as a “national champion” of the country’s industries and workforce.
French newspaper La Tribune adds that the Peugeot family, which is the main shareholder in the company as it owns a 25 percent stake and 38 percent of voting rights, is divided over the joint venture.
GM and PSA Peugeot Citroen spokesmen Jonathan Goodman and Selim Bingol both declined to comment on the reports.
By Andrew Tsaousis
Story References: Automotive News
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