PSA-Dongfeng Deal Backed By EU, Skepticism Remains

Cameron Aubernon
by Cameron Aubernon

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.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • Cargogh Cargogh on Feb 21, 2014

    If the merger can alleviate the awkwardness of that C pillar, I'm all for it. Seriously, I hope Citroen and Peugeot stay in business, even if they aren't sold here.

    • Mjz Mjz on Feb 22, 2014

      That is one homely sedan, looks like a French version of the previous Sebring. And that's NOT a good thing. No wonder their market share has declined. Maybe the Chinese will buy 'em.

  • Herb Herb on Feb 21, 2014

    From TFA: "Gilles Carrez, chairman of the National Assembly's finance committee, told radio station Europe 1 that PSA "had no choice" but to make the deal with Dongfeng because the company "did not know how to operate globally.''" What a shame. The Chinese will teach them, or not.

  • Sector 5 Sector 5 on Feb 21, 2014

    Add PSA has tuned-out about two decades worth of younger buyers in the home market. While the economy is now about as healthy as PSA.