By on June 27, 2013


Mired in the same overcapacity crisis as the rest of Europe’s auto makers, the founding family of PSA is reportedly willing to give up control of the company that owns Peugeot and Citroen in exchange for a fresh infusion of capital from GM, which currently owns 7 percent of PSA.

Terms of the deal are unclear, but PSA is sustaining heavy losses as European car sales have tanked. Unlike arch rival Renault, PSA has no low cost cars to help attract emerging market consumers and value-oriented buyers in Europe.

The Peugeot family still holds a 25 percent stake in the company and retains roughly 38 percent of the voting rights. But the family is reportedly comfortable with the idea of giving up control, according to a Reuters source

“GM faces the same overcapacity situation with Opel, and that’s why PSA is trying to convince them to merge the two,” said one of the people, who asked not to be identified because the talks are confidential. “The Peugeot family has now accepted that they’ll lose control, so this is no longer an issue.”

The news outlet reports that nothing concrete would happen until after September’s German elections. Any deal with Peugeot would undoubtedly result in major job losses and factory closures in France, Germany or another European country, which makes any tie-up extremely politically sensitive. But given the prospect of GM absorbing yet another ailing European brand, deep cuts will be an inevitable part of the consolidation of PSA.

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13 Comments on “Peugeot Family Willing To Relinquish Control Of PSA To GM...”

  • avatar

    Family companies are funny. When you have a member who is inspired, they can rise to bigger heights and faster than purely professional companies. When the leaders have no other qualification than the family name, the company can flounder oh so quickly.

    Didn’t the Ford family step in and “save” Ford by taking the necessary steps ahead of Chrysler and GM? Over at Chrysler Mr Elkman seems to at least care about the company’s future.

    It’ll be interesting to watch, but even though GM seems to be improving, so far they have not shown any real vision for Europe. This could well be the death knoll for PSA. I’m crossing my fingers they’ll somehow muddle through.

  • avatar

    “PSA is reportedly willing to give up control of the company that owns Peugeot and Citroen in exchange for a fresh infusion of capital from GM, which currently owns 7 percent of PSA.”


    But they won’t, GM likes to build ineffectual empires out of dilapidated parts.

  • avatar
    doctor olds

    GM first rose to be the number one automaker by assembling very many businesses and offering more product diversity, while enjoying the greatest scale economies of any maker.

    GM today is demonstrating a systemic capability to develop, produce and sell good quality models anywhere in the world. Use of GMS can be implemented in PSA plants as well, though I have no knowledge that PSA’s quality levels are poor or good. PSA products I saw in Australia were attractive and appeared of high quality. I recall wishing some of them were available in the US.

    A linkup does seem to offer immense scale economies particularly in Europe. PSA is number 2 in that market today. Together, they rival VW’s EU scale.

    The combine would also be very much bigger than VW or Toyota globally.

    • 0 avatar

      self strangulation from towing the company line.

    • 0 avatar

      That’s all well and good, but are their interests aligned? Are their product portfolios complimentary? Will any economies of scale be gained by joining the two companies?

      GM has one of the most comprehensive product portfolios anywhere. It’s hard to imagine what they’d get out of the deal. GMs problems seem to have more to do with resistance to change and management than with products, reach, technology, or economies of scale. I don’t see how investing in PSA can possibly help with that…

      Maybe someone who knows more about PSA can explain?

      • 0 avatar
        doctor olds

        @Luke42- Those are important questions. I sure don’t know much about PSA’s portfolio other than a few eye catching models I have seen. I do know that the potential synergies of a link up require time consuming detailed studies of data none of us are privy to, and with limited understanding of those facts, you can’t expect to “imagine” what they would get out of it.

        If one believes the Euro economic stagnation is not permanent, but just a temporary down in the economic cycle, this would be a great time for GM to “buy low” with the prospect for great benefit when the market there recovers. I don’t have a crystal ball to judge that, for sure.
        GM announced an expectation of $2B/year in savings just by merging purchasing operations, a sum greater than Opel’s loss last year, btw.

        You may be right that GM has a comprehensive product portfolio, though, to me, it looks very much smaller than pre-bankruptcy. They could use some niche/halo vehicles like the kappa sports cars, G6 convertible, as a couple of examples. I have no idea if PSA would help provide this, but know, without a doubt, that the auto business is extremely dependent on volume, economy of scale. A multibillion vehicle line product development cost has to be amortized across millions of units, the more the better.
        @buickman- My comments are strictly my own, based on a knowledge of the business of manufacturing vehicles, not some company line. I am just a sideline chatterer as are most all of us here!

  • avatar
    Jeff S

    PSA needs a mercy killing. GM itself is not out of the woods. GM is having its own problems with Opel.

  • avatar
    Athos Nobile


  • avatar

    It intrigues me that, time after time after time, people jump at the conclusion that the best way to cure 2 ailing companies is to merge them. Almost always, what you get is a larger ailing comany, riven by newly-created internecine strife and much more difficult to fix.

    In this case, it’s even worse. PSA might become majority-owned by GM, but it would still be separate from GM Europe and Opel. There is no sound reason for GM to want to back 3 separate organizations with 3 separate management groups in the European market that don’t compete in significantly different customer segments and aren’t market leaders in the segments they do compete in.

  • avatar

    Using this merger logic, now is time for the Lincoln Motor Carriage Chariot Foundry to purchase PSA!

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