By on October 14, 2013


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.

Get the latest TTAC e-Newsletter!

5 Comments on “Dongfeng Motors, French Government to Buy Stakes in PSA...”

  • avatar

    That should have been expected. Having Dongfeng in control of a French company would have sent shockwaves through the corridors of power in Paris. So far, Brussels has been very quiet on this. I can see them getting involved and screwing things up mightily.

    I wonder what Ford and the germans think about all this? I’m sure that they’re disappointed but won’t say a thing.

  • avatar

    Hollande is trying to bridge jobs between sales downturn and the labor unions. More interesting is what Dongfeng, the silent partner thinks they’re going to get out of this. So far we haven’t heard much from their side.

  • avatar

    I’m betting the scenario went something like this: France refused to back the sale unless Dongfeng guaranteed jobs. DF threatened to walk, and France agreed to put in half.

    The Chinese got a pretty good deal: $2 billion for access to all of PSA R&D (and potentially some of GMs). France gets to trumpet “foreign investment”, and PSA gets what must be the oddest group of board members extant: Dongfeng, GM, the Peugeots, and the French government. With the latter involved, of course, they can write off any chance of profitability.

    • 0 avatar

      The French government already held a stake, and you’re right, profitability is, or will be, at odds with trimming the workforce, something the French government and unions don’t want. That doesn’t mean PSA is doomed, French taxes can keep it propped up for a long time, but the piper must eventually be paid.

      The politicians may think they’re setting up something like the Nissan-Renault operation, but Dongfeng isn’t Nissan. With GM’s shares diluted, I expect the technology cooperation to be curtailed and a future write-off of GM’s holding. With the Peugeot family not only losing control but selling out part of their stake to the government, I can see their exit sometime in the future.

  • avatar

    That new 308 looks very slick especially against the latest JapanInc appliances like the Corolla and Yaris. Hey the French government bailed out Nissan and married it to Renault, maybe they need to do the same for Peugeot while hooking up with rising power China.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • SCE to AUX: Oddly, Mercedes already knew you would say that. Guilty!
  • SPPPP: – Alfa Romeo Milano / 75 – Mazda 323 – Mazda Protege – MN12 Thunderbird SC –...
  • wjtinfwb: With cars lasting so much longer now then in earlier years, I’d like to see all manufacturers...
  • SPPPP: :) Those are some good answers! I would second those, and also go for any 1990s RX7 … or 1980s …...
  • STRATOS: Politicians are generally not too bright.they are puppets of the banksters.Combustible energy cannot be...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber