While Big Deal With GM Fizzles, PSA Plays Footsie With Tata

Ah, those French! With their alliance with GM on les rocks, PSA is casting about for a new partner, just in case “the co-operation with GM and Opel should fail,” writes Germany’s Manager Magazin. PSA and Tata already had first talks, the usually well connected German business magazine says.

PSA CEO Philippe Varin and Tata owner Ratan Tata are old pals: When Varin was CEO of steelmaker Corus, he sold the company to India steel mogul Tata. The Indians successfully took Jaguar Range Rover off Ford’s then trembling hands.

The magazine says its informants at PSA think it could be a good fit: Tata needs new engines, especially advanced diesel mills for a suddenly diesel-crazed Indian market. It also needs advanced smaller and midsized platforms, all of which PSA has.

PSA hopes to develop a joint budget brand with Tata, to compete with Renault’s successful Dacia line. There are ongoing rumors that Renault is planning a super low cost car, also to be developed in and for India. Lastly, Tata has what PSA needs: money.

At first glance, the marriage appears a good fit. CEOs that know and respect each other. Established access to growth market India and Southeast Asian markets. Similar interest in China with different cars. Best prospect: It’s not one half-dead European carmaker being shotgun-wedded to another near-dead European carmaker.

These obviously targeted leaks are too obvious to ignore: First, Reuters Paris reporter Laurence Frost gets an exclusive leaked into his lap, and a day later, Manager Magazin has the sequel, which quickly turns into a flash report at Reuters. Bypassing the usual (and notoriously chatty) local channels, someone is placing stories into trusted and reliable hands.

Meanwhile, Tata and PSA act surprised. Asked whether his company is in talks with PSA, Tata spokesman Debasis Ray told Reuters reporter Andreas Cremer in Berlin: “That is absolutely incorrect.” A chauffée Peugeot spokesman said: “We are still not commenting on the countless rumors about the group.”

Sure. The joint venture that had been put on ice yesterday also never existed.