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Peugeot choosing between GM and Dongfeng

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October 23
4:34 PM 2013

PSA Peugeot Citroen is currently reviewing its options as to the formation of a broader alliance with General Motors Co. If the French carmaker backs away from the GM venture, then this could expand its partnership with China's Dongfeng Motor Corp.

The second largest carmaker in Europe would determine the financial sense in jointly building dmall cars after GM had announced that a USD1 billion savings target from the partnership may not be achieved in 2016 as originally projected.

Dongfeng and the government of France are seeking to purchase equal shares in Peugeot, at about 20% each in a capital infusion scheme to raise EUR3 billion or USD4.13 billion for the company. Aside from the capital purchase, Dongfeng would provide Peugeot with opportunities to expand into China. On the other hand, the GM venture would be for cost reduction purposes in the European market, where current demand is at a two decade low.

Together, Peugeot and Dongfeng jointly operate three factories in China with a projected output of nearly three quarters fo a million by 2015. The Chinese market for Peugeot has climbed by 29%, to a demand of 403,000 vehicles. There is now a fourth plant underway and there would be a new joint venture signed just last month.

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