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PSA Peugeot-Citroen looking for help in China

Published by on Oct 10, 2013 in News Leave a comment

PSA Peugeot Citroen Dongfeng

French group PSA Peugeot-Citroen isn’t going through its best times, ever since financial difficulties hit last year. The group recorded a whopping lost of around 5 billion Euros (more than $6.5 billion) and has been struggling to recover ever since. Even though French officials put all their hopes in the new generation of models that were or will be launched soon, it seems that salvation might come from somewhere else and not from amazing sales figures.

According to Autocar, several sources in China unveiled that Chinese manufacturer Dongfeng Motor is looking to but approximately 30% of Peugeot-Citroen. This didn’t happen by accident, since Dongfeng is the French group’s official partner in China, the two already operating three factories over there (as you probably know, in order to enter the Chinese market, all carmakers are require to have a partnership with a local carmaker). The status of this deal is still unknown and while Chinese newspaper claim that Dongfeng is ready to pay around $1.6 billion (1.2 billion Euros) for 30%, the company’s officials say that they’re currently analyzing this deal and that no decision has been made so far.

The money from China would give PSA a huge breath of oxygen, but it doesn’t mean everything’s gonna be pretty, because these rumors already created unrest both inside and outside Peugeot-Citroen. First of all, there’s General Motors, which currently holds a 7% stake in the French group and has just announced a new generation Opel Meriva based on the MPV platform developed by PSA. And many experts agree that a potential deal between PSA and Dongfeng will most definitely impact the partnership with General Motors and will seriously endanger it. On the other hand, the deal will also deteriorate the relationship between the group and the French workers’ union, which is already damaged and PSA is currently negotiating reducing extra hours payments and freezing some salaries in exchange for making investments in their French facilities.

Source: Autocar

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