The Truth About Cars » France http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sun, 27 Jul 2014 20:45:49 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » France http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com/category/news-blog/france/ Ghosn Top Earner In Japan For Fourth Time In Five Years http://www.thetruthaboutcars.com/2014/06/ghosn-top-earner-in-japan-for-fourth-time-in-five-years/ http://www.thetruthaboutcars.com/2014/06/ghosn-top-earner-in-japan-for-fourth-time-in-five-years/#comments Wed, 25 Jun 2014 10:00:45 +0000 http://www.thetruthaboutcars.com/?p=852041

Renault-Nissan CEO Carlos Ghosn will once more be graced with the honor of being the highest paid executive at a Japanese corporation, having held the honor three previous times in the past five years.

Bloomberg reports Ghosn made ¥995 million ($9.76 million USD) in salary and bonuses for fiscal year 2013, which ended March 31 of this year; total compensation, including dividends, amounts to ¥10 billion ($9.81 million). This puts the CEO ahead of Toyota president Akio Toyoda, who made four times less than Ghosn despite Nissan eking out a profit amid incentive spending and recall costs in the same period. However, Toyoda’s ¥757 million ($7.42 million) in dividends narrows the gap between the two leaders.

Though Ghosn may be killing it in Japan, his total earnings are outgunned by those of his standing among European and U.S. automakers. Outgoing Ford CEO Alan Mullaly earned $23 million in total compensation last year, while GM CEO Mary Barra may receive as much as $14.4 million at the end of FY 2014. Meanwhile, VW boss Martin Winterkorn took home €15 million ($20 million) and Daimler’s doctor Dieter Zetche made €8.25 million ($11.2 million) in 2013. Renault paid €2.3 million ($3.1 million) to Ghosn, bringing total earnings from the alliance to around $13 million USD..

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Renault, Caterham Part Ways Over Direction Of Alpine Joint Venture http://www.thetruthaboutcars.com/2014/06/renault-caterham-part-ways-over-direction-of-alpine-joint-venture/ http://www.thetruthaboutcars.com/2014/06/renault-caterham-part-ways-over-direction-of-alpine-joint-venture/#comments Wed, 11 Jun 2014 13:00:01 +0000 http://www.thetruthaboutcars.com/?p=842033 renault-alpine-a110-50-concept-rear-view

Though a new Alpine is set to come out in 2016, the new car will be lacking in English blood: Renault and Caterham have broken off their engagement to revive the historic French marque.

Autoblog reports the joint venture dissolved amid tensions over development of a pair of sports cars that were set to debut in 2016. Renault and Caterham first came together to build the cars in November 2012. At the time, the latter’s Formula One team ran the former’s engines, and team owner Tony Fernandes wanted to do the same for the Caterham 7. From there, the Société des Automobiles Alpine Caterham was formed under the roof of the Alpine factory in Dieppe, France, and had delivered the A110-50 concept in the brief time the two entities worked together.

Regarding the future, both automakers will pursue building their sports cars separately, though they hinted that “other forms of cooperation” could come about given the right conditions. The joint venture will be renamed Société des Automobiles Alpine during a general meeting this month.

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Renault, LG Chem Sign MOU To Develop Long-Range Battery Technology http://www.thetruthaboutcars.com/2014/05/renault-lg-chem-sign-mou-to-develop-long-range-battery-technology/ http://www.thetruthaboutcars.com/2014/05/renault-lg-chem-sign-mou-to-develop-long-range-battery-technology/#comments Wed, 28 May 2014 11:00:52 +0000 http://www.thetruthaboutcars.com/?p=833473 Renault LG Signing Ceremony

With most EVs getting around 100 miles on a single charge from their battery packs, such vehicles are more suited for the downtown core than a trip to the mountains. However, Renault and LG Chem are looking toward boosting range toward Tesla-like levels, together.

Autoblog Green reports Renault’s CCO Thierry Bolloré and LG Chem’s battery chief Kwon Young-soo signed a memorandum of understanding to develop battery range technology through the use of the latter company’s high-energy-density batteries. LG makes the batteries for EVs and PHEVs, including the Chevrolet Volt, and will supply packs to 20 automakers in 2015, double the business it does currently.

Meanwhile, Renault may use the results of its joint-venture with LG Chem to improve the range — and therefore, potential sales — of its Twingo and other Z.E. EVs. The Twingo was recently shelved in part to less-than-expected demand for the city car, with no word on when the EV will go back on sale.

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Ghosn To Fight For Position Atop Global Three Podium http://www.thetruthaboutcars.com/2014/05/ghosn-to-fight-for-position-atop-global-three-podium/ http://www.thetruthaboutcars.com/2014/05/ghosn-to-fight-for-position-atop-global-three-podium/#comments Fri, 09 May 2014 12:00:12 +0000 http://www.thetruthaboutcars.com/?p=818506 Carlos Ghosn speaks -07. Picture courtesy Bertel Schmitt

Re-appointed through 2018 last month by Renault-Nissan shareholders by a margin of 85 percent, CEO Carlos Ghosn has adjusted his sights on Volkswagen, General Motors and Toyota in an effort to take one of their spots as a member of the Global Three.

Automotive News reports the No. 4 automaker has a ways to go before taking the lowest spot on the podium; in 2013, Renault-Nissan moved 8.3 million off the lot behind VW’s 9.73 million, Toyota’s 9.98 million and GM’s 9.71 million. The Franco-Japanese automaker also relies heavily upon its Nissan division for the majority of sales and profits, Nissan having remained the same size as it was when the alliance formed in 1999 while doubling sales and reaping the rewards over the years.

Meanwhile, Renault struggled to move toward its goal of 3 million cars sold globally in 2013, falling 370,000 units short. Stalled sales of the Zoe EV, the loss of COO Carlos Tavares to PSA Peugeot Citroën, and poor handling of the crisis involving high-level executives falsely accused of stealing corporate secrets — leading to the forced departure of previous COO Patrick Pelata — also dinged both Renault and Ghosn.

On the plus side, Ghosn managed to keep Renault’s manufacturing in its native France, with plans to boost local production by 180,000 units by 2016, as well as helped the French brand meet its cash flow target of 2.5 billion euros over the past three years. While the Zoe may have been a bust, Ghosn proclaimed Renault was still the No. 1 seller of EVs in the European market, accounting for 37 percent to 42 percent of the local market; the alliance has an overall 60 percent of the global EV market. Finally, the CEO believes Renault will see 50 billion euros in revenue by 2017, compared to 41 billion euros in 2013.

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Jackson First Female Head Of Citroën In PSA Executive Realignment http://www.thetruthaboutcars.com/2014/05/jackson-first-female-head-of-citroen-in-psa-executive-realignment/ http://www.thetruthaboutcars.com/2014/05/jackson-first-female-head-of-citroen-in-psa-executive-realignment/#comments Thu, 08 May 2014 10:00:13 +0000 http://www.thetruthaboutcars.com/?p=817794 Citroen CEO Linda Jackson

Managing director of PSA Peugeot-Citroën’s Citroën UK & Ireland Linda Jackson will now have oversight over the entire Citroën brand as its first-ever female CEO.

Autoblog reports Jackson, who managed the brand’s presence across the Channel since 2010, will take her new role as outgoing CEO Fréderic Banzet takes up a senior position in Peugeot’s holding group Société foncière financière et de participations (FPP). Jackson also brings 35 years of financial and commercial experience in the automotive industry to the table.

Both Jackson and Citroën deputy CEO Yves Bonnefont — who will head the DS diffusion line — will take their new roles June 1, and both will report directly to new PSA CEO Carlos Tavares as members of the automaker’s executive committee. A replacement for Jackson will be announced at a later date.

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French Court Overturns Sales Ban Of Daimler Vehicles Using R134a http://www.thetruthaboutcars.com/2014/05/french-court-overturns-sales-ban-of-daimler-vehicles-using-r134a/ http://www.thetruthaboutcars.com/2014/05/french-court-overturns-sales-ban-of-daimler-vehicles-using-r134a/#comments Tue, 06 May 2014 12:00:17 +0000 http://www.thetruthaboutcars.com/?p=815986 aclass

France’s Conseil d’Etat announced Monday that it has overturned the government’s ban of a handful of Mercedes-Benz vehicles over parent company Daimler’s refusal to cease usage of R134a coolant currently under phase-out by the European Union.

Reuters reports the ban — issued by France’s ecology minister Ségolène Royal — was overturned after the court found her order unjustified, stating the vehicles affected did not show “a serious threat to the environment.”

Though vehicles sold in the EU were mandated to use R1234yf beginning in 2013, Daimler cited potential, unacceptable safety issues with the new coolant. Instead, the automaker continued to use R134a in its A-Class, B-Class, CLA and SL models, which were the vehicles banned from being sold in France. Daimler plans to replace the outgoing coolant with CO2 systems by 2017.

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New PSA Boss Tavares Prepares To Rebuild Company http://www.thetruthaboutcars.com/2014/04/new-psa-boss-tavares-prepares-to-rebuild-company/ http://www.thetruthaboutcars.com/2014/04/new-psa-boss-tavares-prepares-to-rebuild-company/#comments Mon, 14 Apr 2014 14:15:58 +0000 http://www.thetruthaboutcars.com/?p=797482 Carlos Tavares

Though PSA Peugeot Citroen secured funding in a three-way deal between itself, the French government and Dongfeng, new boss and former Renault COO Carlos Tavares has a hard road ahead of him as he rebuilds the ailing automaker.

Reuters reports Tavares will focus using the joint venture it shares with Dongfeng to go after 1.5 million sales by 2020, bring exports to Southeast Asia and establish a research center. He will also tighten up both working capital and the number of models sold in each market, as well as squeeze savings from PSA’s suppliers.

However, development woes, pricing issues on some models, and the use of heavy discounts and incentives are all roadblocks on Tavares’ “Back in the Race” plan expected to be issued in full Monday, as well as currency challenges in Latin America and Russia and lower-cost products from around Asia.

As part of the plan, Tavares is expected to halve the number of models it currently offers. On the bright side, the 308 and 2008 both delivered a combined 5.2 percent sales increase in the first two months of 2014, as well as an 8.5 percent Q1 2014 gain over PSA’s home market.

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Car Guys and Car Gals You Should Know About: Emile Mathis and His All-Aluminum 1946 VEL 333 http://www.thetruthaboutcars.com/2014/04/car-guys-and-car-gals-you-should-know-about-emile-mathis-and-his-all-aluminum-1946-vel-333/ http://www.thetruthaboutcars.com/2014/04/car-guys-and-car-gals-you-should-know-about-emile-mathis-and-his-all-aluminum-1946-vel-333/#comments Thu, 10 Apr 2014 13:00:58 +0000 http://www.thetruthaboutcars.com/?p=785577 Retromobile2008_0236

For a man who once ran the fourth biggest car company in France, behind Citroën, Renault and Peugeot, an automobile manufacturer who produced motorcars designed by Ettore Bugatti and others in partnership with Henry Ford, Emile Mathis is relatively unknown today. Though he made many thousands of cars, ironically he’s better known today because of a car of his that never got to production.

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Born in the Alsace region of German nationality in 1880, Emile Mathis was said to have built his first automobile by the turn of the 20th century. Having been formally trained in business, with his interest in cars it was probably natural for him to become a car dealer. The Auto-Mathis-Palace in Strasbourg sold, among others, brands like Fiat, De Dietrich, and Panhard-Levassor, making it one of the leading dealerships in the city. By 1904, he was manufacturing cars under the Hermes brand, building two models designed by Ettore Bugatti. He also had automobiles built with a license from Stoewer.

1904 Mathis Hermes

1904 Mathis Hermes

The first car that he sold under his own brand name, the 8/20 PS, went on sale in 1910 and by the start of World War One two small Mathis cars, the 1.3 liter Baby and the even smaller 1.1 liter Babylette had achieved some measure of success. It was after the war, though, that Mathis started making and selling cars in quantity. By 1927 Mathis was making more than 20,000 cars a year, making the firm the 4th largest automaker in France.

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Emile Mathis and one of his early automobiles

It seems that Emile Mathis was attracted to the United States and American cars. Though sales were strong through the end of the 1920s, with the start of the Depression they started to decline and Mathis looked west. Today, joint ventures between car companies on different continents are commonplace, but then it was a fairly novel idea.

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In 1930 Mathis made his first attempt to forge an alliance with an American automaker. He and William C. Durant made plans to form a partnership. By then Durant had been forced out at General Motors and had started building cars under his own brand. Mathis wanted the American entrepreneur to build cars for the European market in Durant’s Lansing, Michigan factory. They thought they’d be able to sell up to 100,000 cars a year but Durant couldn’t get the project funded and went out of business the following year.

mathis babylette

Staying in France, Mathis expanded his own firm’s lineup. 1932′s Mathis EMY 8 Deauville was a large, eight cylinder car that was likely modeled after the American Packards. In 1934, he introduced the EMY 4, a 1,445cc-powered car with a synchromesh transmission, hydraulic brakes and eventually fully independent suspension, giving him three different car lines and four different trucks. Though Mathis introduced advanced features like those on the EMY lines before his competitors, sales continued to deteriorate.

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Not giving up on his plan of a partnership with an American car company, in 1934 Mathis seemingly hit the jackpot when he negotiated an agreement with Henry Ford. Ford Motor Company wanted to expand production of the Ford Model Y designed for the European market and Mathis’ Strasbourg factory was underutilized. The joint venture with Ford was called SA Française Matford Strasbourg. Ford owned 60% and Mathis the rest. Ford invested a substantial amount of money in the plant which at first produced copies of British and American Fords but by 1936 it was assembling localized vehicles under the Matford Alsace brand. While Matfords are obviously mid to late 1930s Fords, they did have features that distinguished them from non-French Fords, including Mathis’ independent front suspension on some models.

1938 Matford

1938 Matford

Matfords were produced until 1939, but Mathis was both disappointed by lower than expected sales and not comfortable being second in the relationship to Henry Ford so in 1938 he sold his shares in the joint venture. Most of Henry Ford’s business associates eventually parted ways with him. To my knowledge, only a handful of high level Ford employees stayed with the man and his company for their entire careers. Few people maintained relationships with Henry Ford for very long. Mathis was no different.

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Again looking to America, after leaving Matford, Emile Mathis moved to the United States and started making marine engines using the Matam brand. After World War II broke out, he stayed in the U.S. for the duration of the war.

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Before the outbreak of hostilities, Emile Mathis had reasserted control of his factory in Strasbourg but as war approached the region was likely to be contested so he stayed an absentee landlord. Also, as a German Alsatian, Mathis had been drafted in the German army during WWI, but in 1916, while on a mission to Switzerland to buy truck, he deserted, taking the cash he was given for the trucks’ purchase. He also enlisted in the French army. Once Germany overran France in 1940, his return from America was mooted, and in any case since the Germans considered him to be a traitor and embezzler and had him on a wanted list he wasn’t going back to France under the Vichy government.

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In 1946, Mathis returned to France to find his factory in Strasbourg had been mostly destroyed by Allied bombing as it was used by the Germans to make munitions and engines for military vehicles. Well, actually it wasn’t much of a surprise since he had supplied the Allies with the plans to the plants so they could more accurately bomb the production facilities. Before he could build cars he needed to rebuild the factory, which took two years and a substantial amount of money. Once his factory was rebuilt, he tried rebuilding his car company but he ended up being stymied by post war French governmental policies. A book should be written on how trying to structure the French automobile industry per the wishes of politicians and bureaucrats ended up killing off many French car companies. Those policies may also have indirectly led to the death of Emile Mathis himself.

Mathis-Moncoque

In addition to dealing with the policies enacted under what became known as the Pons Plan, Mathis had been out of the country for 7 years and had few connections with holdovers from the Vichy regime and other bureaucrats in positions of power when he returned to France. You can go over to Wikipedia and read about the Pons Plan (named after Paul Marie Pons, a senior French bureaucrat) in more detail but briefly, starting in 1946 the French government basically decided which of the 22 car and 28 truck manufacturers would survive. Since the government controlled permits and, more importantly, which companies got access to raw materials like steel that were in high demand in the postwar reconstruction period, even companies that didn’t go along with the Pons Plan had to comply with it. The net result in the French car industry was that the large manufacturers, Citroën, Renault, Peugeot and Simca were favored while the second tier and luxury car makers were starved of supplies. Engine displacement based taxes also negatively impacted French coachbuilders and luxury marques.

Mathis-Motor

Getting back to Mathis, with his factory rebuilt he needed a car to build in it, something suitable for a continent rebuilding after war. What he came up with was quite advanced from an engineering standpoint, and while it never got beyond prototype stage, with only 10 examples being built, it was novel enough to give Mathis a place in automotive history that his more successful pre-war endeavors have not quite secured. Considered the first all-aluminum car, it’s also, in a number of ways, very similar to a modern car planned by a new automotive startup.

Mathis-Engine Mathis-Engine

What Mathis came up with was the VEL 333. The name stood for Voiture Economique Légere, a light economical vehicle, that consumed three liters of fuel for every 100 kilometers (78.41 mpg), with three wheels and three seats. It had unibody architecture, with the aluminum monocoque being electrically welded. Though steel was in very short supply in 1946, aluminum was abundant. Demand for the metal from the aircraft industry had declined with the end of the war, plus there was ample surplus from planes being taken out of commission, and scrap from planes shot down in combat.

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The two door body was designed by noted aerodynamicist and designer Jean Andreau. Andreau also was an exponent of adding lightness, known for his slogan, “weight is the biggest enemy”. The three wheels were laid out in reverse trike fashion with two wheels up front and one in the back, packaged in a sporty looking and very modern envelope body. Passengers also sat two in the front with the rear passenger sitting sidesaddle. Power was supplied to the front wheels by a water cooled 707 cc horizontally opposed twin putting out 15 horsepower. It appears that the entire drivetrain and front suspension mounted to a subframe that bolted to the unibody. Top speed was said to be 70 mph, aided by the car’s aerodynamics. Total weight was only 386 kilograms (851 lbs) with the body itself weighing only 78 kg (172 lbs). The VEL 333 also had a novel twin radiator setup, with each cylinder having its own radiator (it’s not clear if each cylinder had its own water pump).

Retromobile2005_480

Though he was unable to persuade the French government to let him produce the VEL 333, Mathis didn’t give up. In 1947 he introduced the Mathis 666, this time standing for six cylinders, six seats and a six-speed transmission, which may have been another first and in any case was an early application of such a multi-speed gear box. The engine was again a flat, horizontally opposed motor, displacing 2.2 liters and again Mathis used front wheel drive. It’s possible that the Mathis 666 was the first FWD car with a flat six, decades before Subaru would build one. The 666 had angular styling that still looks almost contemporary, and it featured a wraparound windscreen. Panoramic windshields were a big thing on show cars in the late ’40s and early 1950s. Fully independent suspension, which the 666 also featured, was less common then. A year later Mathis increased displacement to 2.8 liters and the car was shown at the Paris Auto Salon of 1949 but it was to no avail. It’s not clear how many 666 cars were made by Mathis, but a prototype has survived and has been exhibited at the big French old car show, Retromobile.

mathis 6663

For the 1949-1950 model year, Mathis published a 16 page sales brochure that reiterated Emile Mathis’ affection for the United States: “Fast, economical and silent! The Mathis six cyl. car combines the American qualities of endurance and acceleration with the French features of economy and elegance.” That brochure included three alternate body styles of the 666 that likely never got beyond the designers’ sketches, a berline sedan, a roadster with a body by Saoutchik, and the Mathis Dandy, a landau roofed open car by Henri Chapron.

mathis_roadster_cat_50

Emile Mathis’ final car was a Jeep-like vehicle that used the 2.8 liter engine from the 666, introduced in 1951 but just three were built. Emile Mathis kept his factory going by making engines for light aircraft and components for Renault but in 1954 he sold the Strasbourg factory to Citroën. In 1956 Mathis died after a fall from a hotel window. While some have suspected suicide motivated by desperation over not being able to revise his car company, by then he was 76 years old and elderly people do have falls. His death is still unexplained.

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Starting next year, Elio Motors says that it will start making and selling a reverse trike with an aerodynamic enclosed body and a sub 1.0 liter engine powering the front wheels that will get 84 mpg. In the case of the Elio, it’s  a tandem two-seater with a steel tube space frame, not a three seater with an aluminum unibody, still, the specifications aren’t too far apart from the VEL 333. I’m sure that the folks at Elio hope to have more success with their three-wheeler than Mathis did with their own.

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Though his postwar efforts to revive his car company did not end in success, Emile Mathis had an important role in the development of the French auto industry. Perhaps even more important was his role as a pioneer in how cars are made on a global scale. His cars were technologically advanced for their eras and his efforts to forge alliances with American automakers presaged the many international joint ventures in the car industry today.

Emile Mathis was a car guy you should know about.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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Fushou: Donfeng’s Dragon Won’t Eat PSA’s Lion http://www.thetruthaboutcars.com/2014/03/fushou-donfengs-dragon-wont-eat-psas-lion/ http://www.thetruthaboutcars.com/2014/03/fushou-donfengs-dragon-wont-eat-psas-lion/#comments Mon, 17 Mar 2014 12:08:15 +0000 http://www.thetruthaboutcars.com/?p=773753 Peugeot Display in China Circa 2013

In light of fears regarding the three-way deal between Dongfeng, PSA Peugeot Citroen and the French government leading toward a time where Dongfeng would take the reins of the ailing automaker, CEO Zhu Fushou assured his company would not do so.

Automotive News Europe reports in an interview between Fushou and French newspaper L’Alsace, the 14 percent stake in PSA is a “win-win cooperation, not a purchase deal but a way to help PSA return to growth.”

In return for a capital increase of 3 billion euro — made up of 800 million euro contributions from both the Chinese automaker and the French government in exchange for 14 percent of PSA — the two automakers will begin work on conquering the Asia-Pacific automotive market with an aim of 1.5 million units annually, as well as helping Dongfeng better compete against local rivals.

As for Europe, the deal will help PSA reduce its share of vehicle sales in its local market from 62 percent to 50 percent as focus turns toward emerging markets, including Russia and South America. In turn, 10,000 jobs will be cut in the next three years as part of the recovery plan for the French automaker.

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PSA-Dongfeng Deal Backed By EU, Skepticism Remains http://www.thetruthaboutcars.com/2014/02/psa-dongfeng-deal-backed-by-eu-skepticism-remains/ http://www.thetruthaboutcars.com/2014/02/psa-dongfeng-deal-backed-by-eu-skepticism-remains/#comments Fri, 21 Feb 2014 17:00:40 +0000 http://www.thetruthaboutcars.com/?p=751025 Dongfeng Peugeot 308

The PSA Peugeot Citroen-Dongfeng-French government deal agreed upon by the three parties earlier this week received initial backing from the European Union, though skepticism remains as to whether the deal will bring stability to the ailing French automaker.

Bloomberg and Automotive News Europe report French Finance Minister Pierre Moscovici received a letter of initial backing from European Competition Commissioner Joaquin Almunia, confirming the 3 billion-euro deal met “at first glance” European Union rules related to state aid. The EU also approved an earlier 7 billion-euro guarantee to help Peugeot made by the French government via new bonds issued by Banque PSA Finance, which are set to expire next year.

Fellow Minister of Industrial Renewal Arnaud Monteburg, in an interview with France Inter this week, said the deal allows Dongfeng and PSA to use their complimentary strengths in building their respective brands, defending the French government’s decision to sign based on “economic and industrial patriotism”:

PSA is a company with the technology, the marques, but has not been able to grow in Asia, while Dongfeng doesn’t have the technology or the marques, but has the growth in Asia.

Analysts and observers close to the matter remain skeptical of the deal, especially as to whether it would ultimately stabilize Peugeot. GERPISA director Bernard Jullien told French newspaper Les Echos the deal has no precedent, and comes with the potential for instability down the road. Meanwhile, Financial Times voiced a similar concern over how incoming PSA CEO Carlos Tavares will be able to execute his reform plan with a board consisting of Dongfeng, the French government and the already divided Peugeot family.

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Tavares-Led Peugeot Gains 5.27 Billion Euro Makeover http://www.thetruthaboutcars.com/2014/02/tavares-led-peugeot-gains-5-27-billion-euro-makeover/ http://www.thetruthaboutcars.com/2014/02/tavares-led-peugeot-gains-5-27-billion-euro-makeover/#comments Thu, 20 Feb 2014 17:00:10 +0000 http://www.thetruthaboutcars.com/?p=749857 Carlos Tavares

Former Renault executive and incoming PSA Peugeot Citroen CEO Carlos Tavares aims to use the 3 billion euro investment made in the three-way pact between the automaker, the French government and Dongfeng as part of a 5.27 billion euro makeover of the automaker’s line of vehicles over the long-term.

Bloomberg reports Tavares is directing Peugeot to use the funds gained from the deal — as well as capital provided by Banco Santander via the automaker’s lending arm — to boost R&D funding, and to focus model expansion on the most profitable units.

Though the plan will focus on fewer models in the present with future works released down the road along the way to becoming “a global car company,” Tavares said his plan will not fix everything immediately; growing the DS line from a subbrand to a full line to compete against Audi, as one case in point, would take the better part of two decades to accomplish.

The plan will also decrease the number of models sold in unprofitable markets such as Russia while expanding into potential goldmines such as China with the help of partner Dongfeng, both of whom aim to move 1.5 million units annually by 2020.

Complete details of the plan — aimed at ending the steady decline experienced by Peugeot in their sales fight with regional leader Volkswagen AG, as well its six-year slide in overall sales in Europe — will be unveiled in mid-April, weeks after Tavares takes the helm from current Peugeot CEO Philippe Varin.

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PSA-Donfeng Deal Injects New Capital, Extended Life Into Peugeot http://www.thetruthaboutcars.com/2014/02/psa-donfeng-deal-injects-new-capital-extended-life-into-peugeot/ http://www.thetruthaboutcars.com/2014/02/psa-donfeng-deal-injects-new-capital-extended-life-into-peugeot/#comments Wed, 19 Feb 2014 06:23:50 +0000 http://www.thetruthaboutcars.com/?p=747585 2011 Peugeot China 508 With Couple

The 3 billion euro ($4.1 billion USD) three-way deal between PSA Peugeot Citroen, Dongfeng and the French government, signed this week, is set to inject new capital and a much needed life extension for Peugeot, though at the expense of the Peugeot family ceding control after two centuries.

Reuters reports Dongfeng and the French government will each pay 800 million euros ($1.10 billion) for a 14 percent stake in the new alliance while existing shareholders will receive warrants entitling them to purchase new stock at 7.50 euro, ultimately adding 1 billion euros to the memorandum of understanding signed by the three parties. In return, the Peugeot family’s 25.4 percent stake and 38 percent of voting rights in their namesake company will be brought to parity with their new partners, ceding control after over 200 years of business while surviving the end of guarantees totaling 7 billion euros next year.

Aside from the new infusion of capital, the MOU calls for Peugeot and Dongfeng to sell 1.5 million units annually beginning in 2020, jointly establish an R&D center in Dongfeng’s home market, and consider a new sales wing focused specifically upon Southeast Asia. The third point in the MOU would allow Peugeot to fare better than it does currently, having only sold 6,500 units last year in its largest regional market, Malaysia.

As for Peugeot’s home market and the European market as a whole, analysts warn the MOU doesn’t address how Peugeot will address the ongoing problems the automaker has undergone over the past several years. Though some suggested freezing investments and selling more plants to save itself, French industry minister Arnaud Montebourg stated no further closures were “on the agenda.”

The deal will be formally signed in late March around the time of China’s president Xi Jinping visit to Paris.

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PSA-Dongfeng Deal Approved, Chairman Urged To Scrap Deal http://www.thetruthaboutcars.com/2014/02/psa-dongfeng-deal-approved-chairman-urged-to-scrap-deal/ http://www.thetruthaboutcars.com/2014/02/psa-dongfeng-deal-approved-chairman-urged-to-scrap-deal/#comments Tue, 18 Feb 2014 14:16:06 +0000 http://www.thetruthaboutcars.com/?p=743681 Peugeot China 508

The founding family behind PSA Peugeot Citroen has approved the 3 billion euro ($4.1 billion USD) deal between the French government and Chinese automaker Dongfeng just an industry analyst penned an open letter for PSA chairman Thierry Peugeot to reconsider before it becomes too late to turn back.

Automotive News and Reuters report the deal would give Dongfeng and France each 14 percent controlling interest at 7.50 euro/share, while the family’s 25 percent stake and 38 percent of voting rights would be brought down to parity with the two parties. The increase in capital — sought by Peugeot as a last-ditch effort to remain solvent after 7 billion euros in state guarantees expire in 2015 — comes with a warrants issue for current shareholders to buy additional stock worth 1 billion euros.

The vote was met with opposition from within the family and from industry analysts, such as Max Warburton of Bernstein Research. In an open letter to PSA chairman Thierry Peugeot, Warburton urged him to scrap the deal and follow the roadmap taken by Ford and Fiat by hiring a chief executive to help turn around his namesake company without bringing in outside parties into the fold:

Their family stakes remain intact. Their shareholders are happy. Neither are reporting to government officials. There are lessons for you and the rest of the Peugeot family from their experiences. It’s not too late to turn back from Wuhan and fight on.

Warburton’s other suggestions include closing a Spanish plant, halt R&D for a year, and sell their controlling stake in supplier Faurecia.

Within the family, Theirry pushed an alternative plan to his cousin Robert by selling new stock on the market without seeking help from France or Dongfeng, warning that the deal would create an unmanageable three-headed hydra of a governance structure. He was also concerned by a clause in the deal that would prevent the three stakeholders from increasing their stakes over several years, fearing that the Peugeot family wouldn’t be able to regain their company at a future date. Thierry was overruled, and support for the three-way deal moved forward.

As for who will become the new chairman of the company, Dongfeng wants a chairman independent of Peugeot while the French government support PSA board member and former Airbus chief Louis Gallois. The Peugeot family have suggested former Nexans CEO Gerard Hauser, as well.

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PSA Peugeot Citroen, Dongfeng, France Reach Outline Deal http://www.thetruthaboutcars.com/2014/02/psa-peugeot-citroen-dongfeng-france-reach-outline-deal/ http://www.thetruthaboutcars.com/2014/02/psa-peugeot-citroen-dongfeng-france-reach-outline-deal/#comments Thu, 13 Feb 2014 16:30:36 +0000 http://www.thetruthaboutcars.com/?p=740649 dongfeng-peugeot-citroen

PSA Peugeot Citroen, Dongfeng and the French government have reached an outline deal to raise $5.5 billion in capital through a planned share sale in a last-ditch effort by PSA to remain alive after General Motors walked out of a similar deal over the Iranian market last year.

Reuters reports the deal will be presented to the Peugeot board February 18, at which point the board will sign a non-binding memorandum of understanding that same day according to sources closest to the matter. The plan would allow Dongfeng and the French government to each own 14 percent of PSA, while the two automakers retain and expand upon their alliance toward their goal of penetrating further into the Southeast Asia market.

With most of the plan settled, the only item needed to pull everything together is an independent chairman who will oversee the plan’s implementation. The French government wants senior civil servant Louis Gallois, brought aboard under the existing agreement between the state and PSA since 2012, as their champion, while Dongfeng is pushing for French businesswoman and independent Peugeot director Patricia Barbiezt to fulfill the role.

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PSA Board Holding To Dongfeng, French Government Stock-Sale Plan http://www.thetruthaboutcars.com/2014/02/psa-board-holding-to-dongfeng-french-government-stock-sale-plan/ http://www.thetruthaboutcars.com/2014/02/psa-board-holding-to-dongfeng-french-government-stock-sale-plan/#comments Fri, 07 Feb 2014 15:48:19 +0000 http://www.thetruthaboutcars.com/?p=736305 2014 Peugeot 508

With PSA Peugeot Citroen’s supervisory board’s blessing, CEO Philippe Varin is continuing talks with partner Dongfeng regarding the stock sale to both the Chinese automaker and the French government.


In a release made by the French automaker this week, the board expressed their full support for the plan, with the aim for approval by February 18, though the board also said that a successful completion of the plan wouldn’t be guaranteed.

The restatement of the sale, alongside a planned capital increase, came on the heels of reported divisions among board chairman Thierry Peugeot and his cousin, Robert Peugeot, over the $4.1 billion deal; Thierry wanted to sell all of the new stock on the market without Dongfeng or the French government. Meanwhile, the French shareholders’ rights group ADAM voiced concerns over the issue of two major shareholders governing PSA leading to governance issues, stock dilution, and the possibility of a mandatory buyout of the remaining shareholders by the three majors.

The sale would each give Peugeot, France and Dongfeng a 14 percent holding, with the latter two paying just over $1 billion a piece for their holdings. The overall plan would be equal to 75 percent of PSA’s market value, and would help the automaker weather the ongoing sales slump that began in 2012. This follows a similar sale made to General Motors in the same year for $1.35 billion, giving GM 7 percent of PSA that was later sold following the dissolution of a planned partnership in Iran.

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Audi Invests In Synthetic Gasoline From Sugar http://www.thetruthaboutcars.com/2014/02/audi-invests-in-synthetic-gasoline-from-sugar/ http://www.thetruthaboutcars.com/2014/02/audi-invests-in-synthetic-gasoline-from-sugar/#comments Sat, 01 Feb 2014 08:33:57 +0000 http://www.thetruthaboutcars.com/?p=729082 Audis at an Oil Pump

Audi’s bio-fuel initiative is expanding into France through an investment by the automaker to Global Bioenergies, whose bio-isooctane could be the replacement for petroleum gasoline when the time comes to make the switch.

The bio-fuel is made from fermented sugar through genetic modification of E. coli bacteria to produce isobutane gas without poisoning the yeast utilized in the fermentation, an issue currently experienced in ethanol production. The longer-lasting process works with feedstocks like corn and sugarcane as well as straight sugar, and can also be adapted to use biomass such as high-glucose wood chips.

At the pump, bio-isooctane can go directly into a vehicle without modification to the engine and fuel-delivery system, or can be blended with petrogasoline in the same manner as E15 and E85. The biogasoline may also come with a lower price per gallon or litres, as the fuel can be produced much quicker and cheaper than ethanol and other bio-fuels.

For the moment, Global Bioenergies is building two working proof-of-concept production plants in Germany and France, whose total annual output is expected to be 100,000 litres. Audi’s investment will be used to help in the rollout of the new fuel as part of the automaker’s branded e-fuel strategy, with bio-isooctane completing the triad with Audi’s investments in ethanol and biodiesel for their complete lineup of vehicles.

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Renault Resumes Supply Shipments To Iranian Production Lines http://www.thetruthaboutcars.com/2014/01/renault-resumes-supply-shipments-to-iranian-production-lines/ http://www.thetruthaboutcars.com/2014/01/renault-resumes-supply-shipments-to-iranian-production-lines/#comments Thu, 30 Jan 2014 17:30:16 +0000 http://www.thetruthaboutcars.com/?p=728010 Iran Khodro Renault Production Line

After a six-month self-imposed hiatus, Renault has begun shipping “a very low volume” of parts overland to Iran for vehicle assembly.

According to Automotive News, over the past 10 days, parts for the Renault Tondar — the variant of the Dacia Logan built and sold by Iran Khodro — have made their way to Iranian production lines overland from Romania upon temporary easing of sanctions against the Iranian government for their nuclear ambitions. The lifting of sanctions is currently expected to last six months after Tehran pledged to freeze key components of their nuclear program, with talks due next month to work out a permanent deal to wind down sanctions in exchange for curbs in Iran’s aforementioned program.

For Renault and their rivals in Peugeot/PSA, the six-month window is crucial in rebuilding their relationships with their partners in Iran Khodro and Pars Khodro, as well as regaining their foothold on the Persian auto market before more players — such as General Motors — enter the room.

According to Renault’s Asia-Pacific boss Giles Normand, the window marks an opportunity to “gradually restart the supply of parts for vehicle production as well as flow of payments,” noting that the current state of things “must be allowed to improve visibly in Iran” lest their customers feel their country has been short-changed through a lack of visible change.

Total production of vehicles in Iran peaked at 1.6 million units in 2011, the year the sanctions were imposed. Renault lost 64,500 deliveries as a result in 2013, marginally dampening global growth to 2.63 million units overall. With the possibility of 1 million to 1.5 million annual sales at stake, Renault nor PSA can afford another setback.

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Renault Eyeing Return To Iran When Sanctions Lift http://www.thetruthaboutcars.com/2014/01/renault-eyeing-return-to-iran-when-sanctions-lift/ http://www.thetruthaboutcars.com/2014/01/renault-eyeing-return-to-iran-when-sanctions-lift/#comments Fri, 24 Jan 2014 18:18:40 +0000 http://www.thetruthaboutcars.com/?p=707522 Renault Tondar 90. Picture courtesy of Iran Khodro

For the past few months, sanctions against Iran for their nuclear ambitions have sidelined PSA and Renault from the Persian market. Behind the scenes, General Motors outmaneuvered PSA despite their one-time alliance allowing them to muscle their way into aan emerging market via loophole abuse and an unknown quantity of Camaros. With GM out of the way, however, PSA would now be free to regain their footing once sanctions were lifted.

PSA won’t be alone in the upcoming battle, of course, as their compatriots at Renault have plans to return to Iran to reclaim what was lost, and then some.

At the World Economics Forum in Davos, Switzerland this week, Renault-Nissan CEO Carlos Ghosn announced that Renault would be willing to return to Iran once sanctions were lifted so as to capitalize on the potential 50 percent growth in sales. Currently, the sanctioned market represents between 700,000 to 800,000 vehicles, but could explode to between 1 million and 1.5 million units by the end of the 2010s once the market is freed, benefiting both Renault and PSA due to the popularity of French brands in Iran.

Renault’s departure from the Iranian auto market early last year, was out of fear of non-compliance of the sanctions issued against Iran by the United States, consequences of which would have led to Nissan having a tough time as far as U.S. sales were concerned. The pullout cost Renault 64,500 units worth of sales in the nation — 40,000 less than predicted by French newspaper La Tribune back in late July 2013 — and a first-half provision of $698 million that contributed to a 95 percent plunge in net income from Persian sales in the same period.

The vehicles sold in Iran by Renault consisted of Dacia Logan variants built locally from component kits in a partnership with local manufacturer ICKO.

With the noted presence of Iranian President Hassan Rouhani at the annual Davos gathering, Ghosn is confident that the “well-engaged” discussions about resuming international ties between Iran and the West are a sign of good things to come for his company, and for all others waiting to stake a claim. Iran’s auto market is expected to explosively to 1 million units, or 50 percent larger than Australia’s own market, by 2020.

Not that Tehran is waiting, of course.

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Britain Expected to Build More Cars Than France for the First Time Since 1966 http://www.thetruthaboutcars.com/2014/01/britain-expected-to-build-more-cars-than-france-for-the-first-time-since-1966/ http://www.thetruthaboutcars.com/2014/01/britain-expected-to-build-more-cars-than-france-for-the-first-time-since-1966/#comments Tue, 21 Jan 2014 10:00:25 +0000 http://www.thetruthaboutcars.com/?p=704122

Click here to view the embedded video.

For the first time since 1966, the United Kingdom’s automobile industry will likely build more cars than those built in France. Increasing domestic and export sales are expected to make 2013 a record year for car manufacturing, putting Great Britain in third place among car producing countries in Europe, behind Germany and Spain. UK car production is estimated to reach 1.55 million units, up from 1.47 million the previous year and 1.35 million in 2011. In contrast, French car production for 2013 is expected to fall to ~1.54 million units, down from 1.66 million in 2012 and 1.88 million the year before that. Some analysts and industry executives predict UK car production to hit 2 million by 2017 as investments to plants bear fruit.

The growth in manufacturing was attributed to the strength of traditional British brands (albeit foreign owned) such as Jaguar, Land Rover, Mini, Vauxhall, Rolls-Royce and Bentley, as well as strong production at Japanese automakers like Nissan, Toyota and Honda that have set up assembly operations in the UK.

Click here to view the embedded video.

 

Some have attributed both the survival of those British brands and the growth of transplant assembly facilities to late Prime Minister Margaret Thatcher, whose government both courted Japanese automakers and provided £2.9 billion of taxpayer money in subsidies to British Leyland from 1979 to 1988, allowing iconic British brands to survive long enough to be bought up by the Germans.

Click here to view the embedded video.

At the same time the drop in the production of French cars is attributed with overcapacity, a stagnant European car market in general and in particular the soft domestic French market on which French manufacturers are highly dependant, a lack of business confidence in the current government and currency issues regarding the Euro.

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Citroën Bestows First Premium DS Model Upon China http://www.thetruthaboutcars.com/2013/12/citroen-bestows-first-premium-ds-model-upon-china/ http://www.thetruthaboutcars.com/2013/12/citroen-bestows-first-premium-ds-model-upon-china/#comments Wed, 25 Dec 2013 00:53:35 +0000 http://www.thetruthaboutcars.com/?p=687666 2014 Citroën DS 5LS 04
Unveiled at a special event in Paris last week, Citroën’s DS 5LS is the French automaker’s first premium variant of the DS sub-brand. Don’t expect to park this one at the Louvre, however; the DS 5LS is destined solely for the Chinese market.

The 5LS will be the second DS model built at Citroën’s new factory in Shenzhen after the DS5, and will be followed by a China-exclusive SUV and the new DS3 later on in 2014, as well as a larger executive sedan based on the DS9 concept in 2015.

Unlike its hot-hatch brethren, the traditional sedan was made with the Chinese market (and German competitors, such as the Audi A3 Saloon and Mercedes-Benz CLA) in mind. Thus, it measures 185 inches with a 106-inch wheelbase — perfect for party members being chauffeured from Bejing to Macau for a bit of gambling — has a 16-cubic foot trunk, and the interior is filled with opulent materials and high-tech goodies including reversing camera, massaging seats, and air purification.

Under the hood, the front wheels will be driven by either a 1.6-liter turbo providing around 160 to 200 horsepower or a 132-horsepower VTi, with power directed by a six-speed automatic transmission in the 1.6-liter options.

The DS sub-brand aims to move 200,000 units by 2015, along with bringing its home factory up to full capacity. Fifty DS Stores are also planned to open in the largest cities in China in an effort to drive more interest in the 5LS and subsequent models.

The 5LS will make its home market debut during the 2014 Beijing Auto Show this coming April.

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Section 1201 and Automotive DRM: The Future is Locked http://www.thetruthaboutcars.com/2013/11/section-1201-and-automotive-drm-the-future-is-locked/ http://www.thetruthaboutcars.com/2013/11/section-1201-and-automotive-drm-the-future-is-locked/#comments Fri, 15 Nov 2013 15:15:18 +0000 http://www.thetruthaboutcars.com/?p=652002 Renault Zoe

This is the Renault Zoe. It’s like most EVs on the road, with its limited range, limited power, and limited usability.

Unlike the other EVs, however, the Zoe comes with DRM attached to its battery pack. In short: If you value your ability to drive the Zoe at all, then you will submit to a rental contract with the pack’s manufacturer. Should you fail to pay the rent or your lease term expires, Renault can and will turn your Zoe into an expensive, useless paperweight by preventing the pack’s ability to be recharged, consequences be damned.

It’s only the beginning.

Ever since the Digital Millennium Copyright Act came into force in 1998, one particular section has managed to do more damage to innovation than to protect the innovators: Section 1201:

No person shall circumvent a technological measure that effectively controls access to a work protected under this title.

The application of Section 1201 in the past has led to actions such as: The delay in disclosing copy-protection vulnerability found in Sony’s CDs; takedown notices issued by Hewlitt-Packard to researchers for publishing a security flaw in the former’s Tru64 UNIX OS; Lexmark suing anyone who sells aftermarket refilled toner cartridges; and even displacing laws meant to deal with hacking and electronic intrusion, such as the Wiretap and Electronic Communications Privacy acts.

Regarding DRM, many a gamer has experienced their favorite games rendered unplayable because the online component — having reached its end-of-life phase and, thus, the creator no longer supports the software — can no longer be authenticated. So, imagine Zoe owners one day going to work or to visit their grandmother on her death bed when, because Renault decided to no longer support the battery pack nor verify new packs, not being able to start their car. They can’t resell the EV on the used car market, and thus, can’t make some of their $23,000 back on their purchase.

Or worse, imagine if a Zoe driver and their friends were going to a major protest — like the one that led to the Battle of Seattle, for example — only to find their government told Renault to “block” charging of the pack to hinder either their progress to the action or allow the police to “say hello,” as it were.

And of course, let’s say a Zoe owner is the target of a sociopath. They bribe a Renault employee for access to the DRM through social engineering, find “the bitch” who left them, shutdown the battery at home… you can see where this is going.

Now, imagine it happening here with the theorhetical (for now) autonomous commuter pod of 2025 your sons and daughters may end up “piloting.”

At present, Representative Zoe Lofgren, D-Calif., is leading a bipartisan charge to bring about the Unlocking Technology Act, designed to limit the overzealous use of the DMCA and Section 1201 to cases where real intellectual property infringement has occurred. Should this bill become law, it would go a long way to preventing the abuses that have hindered progress elsewhere from infecting the automotive industry any further.

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Iran’s Imported Chevrolet Camaros Raise Questions About GM’s Dealings With PSA And The Iranian Regime http://www.thetruthaboutcars.com/2013/11/irans-imported-chevrolet-camaros-raise-questions-about-gms-dealings-with-psa-and-the-iranian-regime/ http://www.thetruthaboutcars.com/2013/11/irans-imported-chevrolet-camaros-raise-questions-about-gms-dealings-with-psa-and-the-iranian-regime/#comments Thu, 07 Nov 2013 14:26:41 +0000 http://www.thetruthaboutcars.com/?p=644722 IRAN-_USA_obama-rouhani_CALL

An obscure story in the Azerbaijani press this past summer may be the tip of a much larger iceberg involving General Motors, PSA Peugeot Citroen and the Western World’s current bete noir: the Iranian regime currently embroiled at the heart of a controversial nuclear program, which is subject to economic sanctions by the United States government, including those that specifically target Iran’s automotive industry.

Citing reports from Iran’s Mehr news agency, an Azerbaijani news outlet reported that an unspecified number of brand new Chevrolet Camaro RS 2LT convertibles were imported by a division of Iranian conglomerate Iran Khodro. According to the report, the Camaros were sent from Miami to Paris, and then from Paris to Tehran via a Qatar Airways plane. The report also states that US Customs and Border Patrol documents list the final destination as the Aras Free Trade and Industrial Zone.

Iran Khodro, which manufactures automobiles in Iran, is among the Iranian industrial entities that has been hit hard by American sanctions against Iran, including those that specifically target its auto industry, which some parties allege is a “major procurement network that imports material and technologies used to build uranium centrifuges instead of cars.

Given the serious penalties for violating sanctions against Iran, it seems unthinkable at first glance that General Motors vehicles would be exported to Iran for sale without any consequences. GM even stipulated that PSA suspend doing business with Iran and IKCO as part of its alliance agreement with PSA, an agreement that seems to have stalled at this point. But a deeper dive into the matter reveals a much more complex picture, one that sheds more light on GM’s future positioning in emerging markets, its dealings with Iran itself, and what may be the true nature of its alliance with PSA.

The ties between PSA and IKCO have historically been very strong. Most of IKCO’s cars were Peugeot vehicles of varying ages, branded as Iran Khodro or Peugeot vehicles, and built in Iranian factories. In a market of 1.12 million units annually, IKCO had production capacity for a million units per year, with IKCO and PSA’s joint venture ruling the vast majority of those sales, while their factories ran very close to capacity in previous years. PSA alone accounted for roughly 458,000 units sold in Iran, while PSA rival Renault also had a strong interest in Iran, selling 100,000 units per year, until it withdrew from the country, citing fears of violating U.S sanctions as a reason for walking away from the Iranian market.

Now, various French news outlets, including Le Figaro, a respected daily newspaper, are accusing General Motors of intentionally gutting PSA’s ability to do business in Iran, while attempting to establish its own partnership with IKCO, as a means of securing a strong footing in the up and coming Iranian market, one that Boston Consulting Group estimates is good for 1.5 million units per year by 2020, making it one of the strongest of the “Beyond BRIC” countries.

Le Figario states that

Iranian automotive industry is particularly courted by General Motors . The giant came into contact with Iran Khodro, which worked until 2012 with Peugeot to produce 206 and 405 models that the French group has stopped delivering to Iran because of Western sanctions imposed on Tehran for its nuclear ambitions . “For at least six months as emissaries of General Motors go to Iran, they are no longer the simple identification of the market,” warns the industry, “but rather to the draft contract resumption of GM “, which was firmly established in the time of the Shah.

Le Figaro alleges that GM is not the only company to be looking to Iran if and when relations between America and Iran thaw amid a resolution over its nuclear crisis, but it does call out an ad campaign on behalf of GM undertaken by an Iranian law firm – other reports also point to a social media campaign designed to target Iranian consumers on behalf of GM. Other allegations leveled at GM include the use of emissaries on behalf of GM visiting Iran and IKCO as part of a broader push to undermine established French business interests in favor of American companies in preparation for the resumption of commercial dealings with Iran. One source cited by Le Figaro doesn’t think that this was a mere coincidence. The source claims that Executive Order 13645 is

“…a real cleansing of the Iranian car market as it prepares to make way for U.S. manufacturers before a political deal between Tehran and Washington.”

Upon closer examination, sale of the Camaros appears to be allowed under a loophole in Executive Order 13645 , which punishes any foreign entity that sells or supplies parts or services to Iran’s automotive industry (specifically its manufacturing sector) but does not prohibit supplying Iran with assembled vehicles.

During the initial stages of the tie-up, the alliance between GM and PSA was difficult to discern. Beyond vague platform sharing and purchasing agreements, there seemed to be few synergies that made such an alliance worthwhile. By the Iranian angle adds context to the entire affair.

By putting pressure on PSA to end its relationship with IKCO, GM gave America a way to keep the heat on Iran’s economy while also cutting off an artery for hard currency via reduced vehicle exports. At the same time, it was able to cripple an already ailing partner by cutting it off from one of its better export markets, and a growing one at that. Before the alliance had even been former, our own global sales reports showed that sanctions and other economic factors had been effective at gutting Iran’s automotive market, composed largely of locally built IKCO/PSA products. The departure of Renault was another positive development for GM, with the French auto maker walking away from 100,000 units annually. Altogether, the absence of the two French players leaves a 585,000 unit hole in Iran’s nearly 1 million strong auto market, one that GM is primed to capitalize on if and when things get less frosty and trade relations between the two countries open up .

Many observers feel that Iran’s Islamic regime is living on borrowed time, thanks to a relatively young population that is plugged into Western popular culture – these same people came very close to toppling the regime just a few years ago. And while regime change doesn’t seem to be in the cards anymore, then the very sanctions designed to bring the regime to its knees might at least foment some sort of normalization of relations in exchange for the forfeiture of Iran’s nuclear program, along with a new, more moderate ruler (though Iran’s unelected religious leaders still hold all the power). Such vast numbers of young people with rising economic prospects and families of their own on the horizon will be perfect consumers for a large number of automobiles in the future, and who better to serve them than General Motors?

The timing is likely to be fortuitous, as Iran’s auto market is expected to grow by another 500,000 units, to roughly 1.5 million units by the end of the decade. GM’s push won’t be centered around Camaros either. The General has a number of Chinese brands selling cheap, compact vehicles that can go head to head with Chinese brands like Great Wall that are already established in Iran. If GM really does make a big push into Iran, brands like Wuling and Baojun will be just as important as Chevrolet and Buick, and will likely be part of an attempt to capture a substantial amount of volume by utilizing multiple brands in GM’s portfolio to help capture various market segments from compact low-cost cars to flashier fare to the smaller commercial vehicles that brands like Wuling are known for.

Platform sharing, the oft reported cause of death of the GM-PSA alliance, may have been a red herring all along. GM could possibly have decided to abandon the alliance, or any pretense of it, after getting what they came for: in this case, an express pass to a promising emerging market that isn’t a BRIC country. But don’t count PSA out just yet. Recent talks with Chinese auto maker Dongfeng could allow it to get back in the game in Iran, free of any concerns about violating U.S. sanctions.

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PSA: Business Model for Joint Small Car With GM “Just Wasn’t There” http://www.thetruthaboutcars.com/2013/10/psa-business-model-for-joint-small-car-with-gm-just-wasnt-there/ http://www.thetruthaboutcars.com/2013/10/psa-business-model-for-joint-small-car-with-gm-just-wasnt-there/#comments Thu, 24 Oct 2013 11:00:32 +0000 http://www.thetruthaboutcars.com/?p=632802 The next Citroen C3 and Peugeot 208 will not share a platform with Opel's Corsa as originally planned

The next Citroen C3 and Peugeot 208 will not share a platform with Opel’s Corsa as originally planned

In the wake of news that China’s Dongfeng Motors is going to take an equity stake in PSA/Peugeot Citroen, the French automaker says that it is scaling back its alliance with General Motors, which owns 7% of PSA. PSA said that a planned joint subcompact platform that was seen as the basis of the tie-up with GM will probably be cancelled. “Further analysis showed that the business model just wasn’t there,” a PSA spokesman said. Financial statements released by PSA say that anticipated savings of $1 billion due to synergies with GM will be adjusted downward.

The cancelled platform was supposed to have underpinned replacements for the Peugeot 208, Citroen C3 and Opel Corsa. Barclay’s analyst Kristina Church said that a common small car was “absolutely key” to the partnership.”It certainly seems GM has no focus on the alliance with Peugeot any more. They don’t want to be partnered with a struggling company, and they have alternative methods to turn things around [in Europe],” Church said.

Still, GM and PSA spokesmen said that the alliance is going forward. “We have other projects under review. Some projects are not economically feasible, which is why they are dropped, but we’re taking the projects one-by-one and examining their economic feasibility first,” a PSA rep said. The companies will still produce a jointly developed small minivan at GMs Zaragoza, Spain factory starting in 2016. “We are moving forward with the implementation” of the projects which have already been agreed upon, Ulrich Weber said for GM.

The deal with GM was originally a main part of PSA CEO Philippe Varin’s strategy to turnaround the struggling French carmaker. Working with a company of GM’s size was seen as a way of reducing costs. After GM took a 7 percent stake in PSA in February, 2012 the automakers announced plans for at least five joint vehicle and powertrain programs. However, soon afterwards, GM revealed that SAIC, it’s partner in China could veto some of the plans.

Remaining are the upcoming small minivan and another joint vehicle development program working on a crossover, along with joint purchasing. PSA did say that so far joint purchasing has saved the company about 60 million euros so far this year.

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Reuters: Dongfeng/PSA Tie-Up Resulted From GM Scaling Back Cooperation http://www.thetruthaboutcars.com/2013/10/reuters-dongfengpsa-tie-up-resulted-from-gm-scaling-back-cooperation/ http://www.thetruthaboutcars.com/2013/10/reuters-dongfengpsa-tie-up-resulted-from-gm-scaling-back-cooperation/#comments Tue, 15 Oct 2013 14:58:58 +0000 http://www.thetruthaboutcars.com/?p=624193 gm-psa-ceos

Reuters is reporting that the reason behind PSA/Peugeot Citroen’s financial tie-up with China’s Dongfeng Motors was the decision of General Motors, which owns 7% of the French automaker, to scale back cooperation with Peugeot. GM also apparently rejected a PSA/Opel merger backed by the French government.

In February of 2012, GM announced its investment in PSA as part of what was publicized as a broad based partnership. However, the relationship had problems only months later when GM announced that Shanghai Automotive (SAIC), its partner in China, vetoed some of the joint GM-PSA product planning.

Also, in June of this year, Peugeot had arranged approval from the French government for a restructuring that involved a merger with GM’s European Opel division, but the Detroit based automaker disapproved the deal. The less than smooth relationship with GM persuaded Peugeot CEO Philippe Varin to find other financial partners, ending in the reported $4 billion capital investment in PSA by Dongfeng and the French government. If that deal goes through, the holdings of GM would be diluted and the Peugeot family, which currently owns a bit more than a quarter of its shares, would no longer control the firm.

In exchange for the investment, Dongfeng will get access to PSA’s technology and markets.

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Dongfeng Motors, French Government to Buy Stakes in PSA http://www.thetruthaboutcars.com/2013/10/dongfeng-motors-french-government-to-buy-stakes-in-psa/ http://www.thetruthaboutcars.com/2013/10/dongfeng-motors-french-government-to-buy-stakes-in-psa/#comments Mon, 14 Oct 2013 14:34:29 +0000 http://www.thetruthaboutcars.com/?p=622793 dongfengpsa

Reuters has reported that Chinese automaker Dongfeng and the French government will be taking equity stakes in PSA/Peugeot-Citroen after injecting $4.1 billion into PSA.  Under the draft agreement, which is still being negotiated, Dongfeng Motor and the French government will each put 1.5 billion euros into the French automaker, with each of those parties getting a 20 to 30 percent share in the company.

 

As a result, the Peugeot family, which currently owns 25.4% of PSA, will find its holdings diluted below controlling levels. The sale will also dilute General Motors’ 7% share of PSA. Part of the increased capitalization will come from a sale of stock to the French government by the Peugeots, while the remainder will be raised through a reserved capital increase. The 3 billion euros put into PSA would be the equivalent of 68% of the company’s current market value.

PSA sales were down 18% in August, and its market share has dropped to 11% so far this year, almost a full percentage point decline. The company lost 5 billion euros ($6.6 billion) last year. In July PSA announced that it expected to reduce the cash burn in 2013 to 1.5 billion euros.

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