Peugeot and GM Discuss 'Strategic Partnership'
Leading French carmaker PSA Peugeot Citroen is in talks with US giant General Motors on forming a "strategic partnership", French Labour Minister Xavier Bertrand said Wednesday.
Peugeot shares surged almost 15 percent on the Paris exchange in morning trading as news of a possible huge tie-up between two industry giants spread.
"The chairman of the group informed me last night about discussions for a strategic partnership, and told me it was good news for the group", Bertrand told Europe 1 radio following press reports.
Bertrand said Peugeot chairman Philippe Varin had told him the deal would allow the French group to cut its production costs, but he would not be drawn on whether the plan was for a full merger or a simple alliance.
The minister said the talks were broadly good news, but that his government was seeking assurances French jobs were safe. President Nicolas Sarkozy is due to seek re-election in nine weeks and Peugeotis a major employer.
The French state helped bail-out both Peugeot Citroen and its rival Renault during the recession that followed the 2008 credit crunch, but does not hold a stake in the group. It was nevertheless watching the talks nervously.
"The government does not interfere in decisions taken by big private groups but obviously we're watching the situation at PSA closely, because it concerns French industrial strategy and jobs," said Budget Minister Valerie Pecresse.
Peugeot confirmed overnight it was in talks with other carmakers, without identifying GM, and the business daily Les Echos said the two groups were planning to announce their alliance at the Geneva motor show next month.
"In the context of its globalization strategy and improving its operational performance, PSA Peugeot Citroen looks at potential cooperations and alliances," the firm said in a press statement.
"Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement," it said.
General Motors also refused to confirm the deal, saying simply: "GM regularly holds discussions with others in our sector but wishes to make no comment on this specific information."
The Financial Times reported that the alliance would see Peugeot and GM's European subsidiary Opel Vauxhall jointly developing parts and engines in Europe for vehicles sold under their respective brands.
PSA had revealed last month that it was open to the idea of international alliance, but to date rumors have focused on a possible tie-up with the U.S. and Italian group Fiat-Chrysler.
PSA's sales fell 1.5 percent last year and its net profit was cut in two, to only 588 million euros ($777 million).
The group already has cooperation agreements with Germany's BMW to build petrol engines, with Italy's Fiat and Turkey's Tofas to build light trucks, and with US giant Ford for diesel engines.
It works with Japan's Mitusibishi to build SUVs and electric cars, with Toyota for small cars and with its historic French rival Renault to build motors and mechanical parts.
But the group has struggled to compete globally with industry mammoths like GM, Toyota and Volkswagen and auto alliances like Renault-Nissan and Fiat-Chrysler.
Source: Agence France Presse
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