Paris: French auto maker PSA Peugeot Citroen is considering a tie-up with Mitsubishi of Japan, the financial newspaper La Tribune reported on Friday, and the price of PSA shares jumped.
The paper, citing no source, said that Peugeot head Philippe Varin was “actively considering an alliance with Mitsubishi.”
The two groups have already joined forces to develop an electric vehicle and have a partnership in Russia. The paper described a Peugeot-Mitsubishi alliance as “technically and geographically ideal.”
The price of shares in PSA Peugeot Citroen jumped by 6.57% to €19.87 here. The overall market as measured by the CAC 40 index was showing a gain of 0.53%.
Shares in rival French group Renault rose by 3.72% to €29.87, and stock in French tyre maker Michelin by 3.89% to €51.44.
At Natixis Securities, analysts said in a note to clients: “The idea (of an alliance with Mitsubishi) is not new and could make sense for several reasons, particularly since BMW has totally ruled out any idea of a capital alliance.”
Natixis said, “Peugeot sells mainly in Europe while Mitsubishi is present mainly in Japan.” Mitsubishi also had a presence in the United States.
At CM-CIC Securities, analyst Guillaume Angue said that the purpose was to make the French group more international and to “strengthen its presence on growing markets” and he thought that an alliance was probable.
Currently Europe accounts for 66% of PSA Peugeot Citroen sales, he said. Mitsubishi seemed to be a reasonable target for PSA in terms of size because it had sold 1.06 billion vehicles last year compared to 3.26 billion by PSA.
He said that PSA had limited financial means but that a deal could be arranged via an exchange of paper.
Peugeot, Mitsubishi to launch electric car
Both companies have agreed to launch an electric car in Europe by the end of 2010, the companies said on Friday.
The French and Japanese car makers said the as-yet unnamed vehicle will be based on Mitsubishi’s i-MieV, which was launched on the Japanese market in June.
The car will be built in Japan and the carmakers target eventual annual global sales of 50,000 vehicles, PSA Peugeot Citroen spokesman Jean-Marc Sarret said. Half of these sales will be made by Peugeot and Citroen in Europe, the rest by Mitsubishi in Japan and elsewhere, Sarret said.
Peugeot and Citroen will announce the names of their respective electric cars in the coming days, Sarret said.
The car will be able to drive for 130 kilometers (81 miles) between charges, with a battery that can be fully recharged in six hours, Sarret said.