Rumor: psa negotiating partnership with gm

The ailing french carmaker psa peugeot citroen is negotiating a strategic partnership with us rival general motors (gm). Psa boss philippe varin had informed him about corresponding discussions, france’s labor minister xavier bertrand told radio station europe 1. Earlier, the business news portal la tribune had already reported on "advanced discussions" with opel’s parent company gm. They are said to have been going on for months.

Psa itself did not want to comment in detail on the negotiations on wednesday. As part of its globalization strategy, it is reviewing cooperation and alliance projects, it said in a terse statement. "Discussions are ongoing and there is no certainty that they will lead to a result," a spokesman said. Psa shares were up about 16 percent by midday. The rude french carmaker has been deep in crisis for months. While competitors such as volkswagen and renault are setting new sales records, the number two in europe has recently had to cope with one bad news after the next.

According to the recently published balance sheet figures, the car division posted a loss of 92 million euros last year – after a profit of 621 million euros in the previous year. The company’s management had previously announced a drop in sales to 3.55 million vehicles. A drastic cost-cutting program is expected to cost around 6,000 people their jobs in europe this year alone.

Industry experts also believe the lack of a major partner is a cause of the misery. Psa is the only european car giant with a complete product range that does not have an alliance partner, but only cooperations with manufacturers such as bmw, ford and mitsubishi. Recently, there had been repeated speculation about the need for a genuine partnership along the lines of renault-nissan or vw and suzuki. "We are ready (…), but the right partner must be found," new brand boss frederic saint-geours had said in january 2012. Italian media had previously reported on a possible upcoming alliance between psa peugeot citroen and fiat.

Opel’s parent company, general motors, is considered a suitable partner because it is much better positioned internationally than psa. Thanks to strong sales in its home market and in booming china, it made a record $7.6 billion profit last year. According to stucco figures, the americans are the number one in the industry even ahead of europe’s number one volkswagen.

If psa and general motors reach an agreement, the collaboration could be announced as early as the first week of march at the geneva motor show, wrote la tribune. How exactly it could look, however, is unclear. According to industry sources, the cooperation should not result in a takeover of any kind. Both companies will remain independent and responsible for their own production facilities. La tribune reported, citing unnamed sources, that the cooperation plans are not only aimed at selective cooperation.