#PSA

During the courtship stage between Geely and Volvo, and after their recent nuptials in Gothenburg, Sweden, we often raised the matter of Chang’an. Chang’an has had a joint venture with Ford since 2001. Under the JV, they also make Volvos in China, the S40 and S80, to be exact. They don’t make them in large numbers. 22,405 Volvos were sold in China last year, up nearly 80 percent compared to 2008. The S40 has been on the Chinese market since 2006. The S80L, a long version of the S80, was introduced last year. Chang’an had been in play as a suitor for Volvo, but bowed out.

What will happen to Chang’an’s Volvos?

In the world of automobiles, it appears that China isn’t the only fruit ripe for the plucking. Brazil is buzzing. They’re weathering the current economic fragility very well, and companies are looking to invest in there. Down in Brazil, economically speaking, it’s car-naval time!

PSA, Europe’s second largest car maker after Volkswagen (14.9 percent and 20.8 percent market share respectively in February 2010, as per ACEA) considers changing their name, says Bloomberg. There are several choices on the table, the front-runner appears to be …

With the Chinese planning an electrical assault on Europe, with Nissan preparing their Leaf and with Renault charging-up Zoe, Peugeot-Citroen (PSA) is probably feeling a little exposed right now. Bad enough PSA failed to work out an agreement with Mitsubishi. Now they’re deficient in the no carbs category. But don’t worry, a white knight is coming to the rescue and offering them a ready-made electric vehicle. That’s right, they couldn’t work out a capital tie-up, but PSA and Mitsubishi Motors worked out an agreement on electric cars.

Last December, France’s PSA group and Japan’s Mitsubishi Motors seemed to get really tight (and set off the memorable TTAC series of shibari illustrations.)

Something must have happened during their courtship. The main players met on neutral ground at the Geneva auto show and called off the engagement.

First Renault and Nissan. Then VW buys a stake in Suzuki. Now Mitsubishi Motors is in talks with PSA Peugeot-Citroen about a capital tie-up.

You’ve seen nothing yet, thinks Japan’s Nikkei. “The latest round of partnerships is widely seen as just the beginning of a major shakeup of the automaking industry,” says the paper that is usually well informed about these matters.

“Both Mitsubishi and Suzuki should take cues from Nissan Motor Co, which was rescued from the brink of bankruptcy in 1999 by French firm Renault SA.” says the Nikkei: Translation: Don’t just have small minority share and swap deals. Sell majority control to partners with deep pockets. And get ready for a serious battle for world market domination.

A few days ago, TTAC reported that PSA and Mitsubishi were looking to forge closer ties with either a cross holding format, like Renault-Nissan, or by PSA taking a 30-50 percent stake in Mitsubishi. According to Bloomberg, analysts like Oppenheim’s Jens Schattner are ruling out equity acquisitions, saying the two firms should concentrate more on co-operation. “Peugeot doesn’t have the liquidity to take a major Mitsubishi stake in cash” he says, and he’s not the only one splashing cold water on the hook-up. Eric-Alain Michelis, an analyst at Societe Generale adds that PSA may have to issue new shares to pay for that stake in Mitsubishi they want, which will not please the Peugeot family as it will dilute their holding. Otherwise, “raising the finance would not be a walk in the park,” he reminds. Were PSA to issue shares to cover €1 billion of the $3.7billion needed for a 50% stake in Mitsubishi Motors, it would reduce the Peugeot family’s investment to 25%. Quelle horror!

Renault has its Nissan. Jealous PSA seeks the company of a pretty Japanese bride of its own. Mitsubishi Motors Corp. confirmed to the Nikkei [sub] today that it is in talks with PSA Peugeot-Citroen about some financial shibari. The capital tie-up could see PSA take a majority position in Mitsubishi Motors.

“We have been talking whether we can have deeper relationship, and a capital tie-up is one among many options,” said a Mitsubishi Motors spokesman, declining to comment on the scale or value of any potential deal. The Nikkei [sub] reported earlier Thursday that PSA could buy a stake of 30 percent to 50 percent in Mitsubishi Motors and become its biggest shareholder.