Odd Couplings: GM To Buy 7 Percent Of PSA? What For?
Hear that chafing sound? It is analysts scratching their heads. They wonder why in the world would GM buy 7 percent of France’s PSA Peugeot Citroen. Bloomberg says this is about to happen. Neither GM nor PSA wants to confirm the deal. However, Bloomberg already has intricate details of the planned transaction, someone seems to be talking on deep dark background. Sounds like the odd couple is about to do it.
The question remains: Why?
GM lost $747 million in Europe in 2011, where losing money has a great tradition for the General. It is GM’s 12th annual loss in a row. So far, GM has lost $12.4 billion in Europe, and there is no end in sight.
PSA’s track record is less bleak. Europe’s second largest car company made money in 2010, lost money in 2009, made money in 2008. Recently, PSA has been engaged in a frenzied sell-off of assets. It looks like they are raising money in a hurry.
Both are looking at a Europe that is about to contract. PSA is heavily exposed to the troubled Mediterranean parts of Europe. Both have been hemorrhaging market share in Europe.
All kinds of reasons are being presented for the alliance that just won’t make sense: Diesel engines, light commercials, joint sourcing of parts. None of these create the desired slap the forehead effect. I guess we’ll get a convincing reason if the deal indeed goes ahead.
Any better ideas, Best & Brightest?
Mertcft on Jun 25, 2012
i tell you why they bought it.. PSA had a joint venture with BMW in Munich called BPCE (BMW Peugeot Citroen Electrification) and they were all working on electric vehicle concepts which will be used by BMW and PSA group vehicle in the near future. With this buy out GM has made this alliance go down and at the moment BMW hybrid vehicle projects are a mess and till the next move bmw has ruled out on the electromobility game in europe. on the other hand volkswagen group is doing its own development on electromobility still full gas. so PSA was a good move for GM to buy the PSA equity just a little less than peugeot family. GM will sel its electromobility know how to PSA and develop them further in europe. in that case PSA will be the only oponent in front of VW in europe without bmw in the game..
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