BackPeugeot said to consider stake sale to Dongfeng Motor in China
French automaker to raise cash for an expansion outside its home continent
Premium(Bloomberg)
Paris: PSA Peugeot Citroen, Europe’s second-biggest carmaker, is considering selling a stake to Chinese automaker Dongfeng Motor Corp. to raise cash for an expansion outside its home continent, two people familiar with the matter said.
“The talks are at a preliminary stage and nothing has been decided yet," said the people, who asked not to be identified because the talks are private. “The sale of a stake could lead the Peugeot family, which currently owns 25.5% of the French carmaker’s shares, to lose control of the company," the people said. Jean-Baptiste Thomas, a Peugeot spokesman, declined to comment.
Peugeot, which reported a first-half operating loss in its automotive division of €510 million ($681 million), is losing market share in Europe to Volkswagen AG, the continent’s largest automaker. Peugeot is especially reliant on debt- strapped southern countries such as Spain, Italy and France for sales.
To push expansion elsewhere, Peugeot is already partnering with Dongfeng, opening an assembly plant together in July to produce four models in China. The new factory, Peugeot’s third in the world’s largest auto market, will increase the company’s annual capacity in China by two-thirds to 750,000 vehicles by the end of 2015.
Chief executive officer Philippe Varin has pledged to cut the manufacturer’s cash-consumption rate by 50% in 2013 after burning through €3 billion last year. He plans to eliminate 11,200 jobs in France by 2015 and close a car plant in Aulnay, on the outskirts of Paris. Bloomberg
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