By on February 11, 2013

After approving a $1.6 billion loan guarantee for PSA’s captive finance arm, the European Commission demanded a restructuring plan for all of PSA within six months.

Reuters quotes an EU spokesman as telling the French government

“We expect France to notify to us of a restructuring plan, not just for the banking arm but for the whole PSA group, because this aid also benefits the whole group,”

Government aid for Banque PSA was first proposed back in October, as it became difficult for the finance unit to borrow money due to the overall weakness of PSA itself. A bailout of Banque PSA was also seen as more palatable than providing aid to the car making unit.

Details of any potential restructuring are unclear, but the EU wants to make sure that PSA’s business will remain viable without any further state aid. Either way, PSA will be under the gun even further, as attempts to cut jobs have already raised the ire of France’s powerful labor unions and the current left-wing government.

Lacking the same profit sources as its French rival Renault (like low cost cars and exposure to healthy markets), PSA has been in the toilet financially, bleeding as much as 200 million euros per month. Even the new 208, France’s best-selling car last month, hasn’t been enough to help stem the tide.

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11 Comments on “EU Approves Banque PSA Financing, Demands Total Restructuring...”

  • avatar

    Global overcapacity means the weak must go. So, why not au revoir to PSA?

  • avatar

    le fail

  • avatar

    Does anyone think that France will allow PSA to die?

    • 0 avatar

      Not at all. Bailout is going to happen.

    • 0 avatar

      The odds that the French government will permit PSA to die are not much higher than the odds that the Eiffel Tower will be sold off for scrap metal.

      The French have an investment fund (FSI) that they can use to take equity in PSA if necessary. It wouldn’t be the first time that an EU member threw money at private companies in the guise of an investment, and it certainly wouldn’t be the last.

      • 0 avatar

        And the French government has a long history of being more than willing to push right up to the limits of what EU regulations will allow in terms of protectionist aid to industry. Given their past history on the subject, with their shipyards and utilities, among other industries, it would be unusual for them not to do all they can to help PSA. This is in contrast to, say, the British, who have been much more willing to allow domestic industry to die off if there’s even a slight chance of the EU slapping their wrist.

  • avatar

    Bailouts of G.M., Chrysler, and PSA may be good politics, but they are bad economics. Government should not reward bad management because they are punishing the companies that managed well. Every G.M. and Chrysler product sold damages Ford and the other companies that have earned the right to those sales. In essence,the sick have been have put among the well corrupting the marketplace.
    Let economic forces take their course. The survivors will take up the slack in employment and production, and the rest will go the way of Studebaker, Hudson and Nash. This is how the American economy grew and prospered. Don’t mess with success.

  • avatar

    If France still had an army and navy, it could solve a lot of Europe’s problems by invading Belgium and rounding up the bureaucrats in Brussels. And to think Vienna actually WANTED them!

  • avatar
    Pastor Glenn

    Perhaps Mitsubishi, which needs a D-class car for North America (with the demise of the Galant), should ink a deal to have Peugeot supply rebadged 508 sedans and station wagons with 2.3 litre engines. They’re built in France. The new Galant. Then advertise the heck out of it, and expand the dealerships (perhaps by approaching prior Suzuki stores in areas without Mitsubishi representation).

    As long as the quality is good, the cars might sell in some sufficient number. It’s not like Peugeot-Citroen don’t already have a relationship with Mitsubishi – Mitsubishi had been supplying their SUVs for sale as Peugeot and Citroen (with specific front clips and trim etc) until recently. I think they may have been built in the now closed Nedcar factory. (Now PSA has their own SUVs I believe).

    • 0 avatar

      I think you might have piqued the interest of Mitsubishi brass right up to “advertise the heck out of it”. If Mitsubishi knew how to advertise, they’d have sold a few more cars, or at least more Americans would have heard of Mitsubishi.

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