Chairman: Peugeot Not Ruling Out Taking Stake in GM

March 7, 2012
However, it 'is not the right moment' to do so, as the group wants to hold on to liquidity for its own development.

PSA Peugeot Citroen does not rule out taking a stake in its new alliance partner General Motors, Peugeot Chairman Philippe Varin said Wednesday.

"Nothing is excluded for the future," said Varin at the Geneva Motor Show.

However, it "is not the right moment" to do so, as the group wants to hold on to liquidity for its own development.

PSA Group, Europe's second-biggest automaker after Volkswagen, last week announced a deal with General Motors in which GM will take a 7% stake in the French group, thereby becoming its second-biggest shareholder.

Under the deal, the two automakers will share certain vehicle platforms, components and modules, as well as pool their purchases together, in order to cut costs.

The alliance will begin taking shape Thursday when PSA Group launches a capital hike of a billion euros. Peugeot will hold 25.2% of capital and 37.9% of voting rights of PSA after the capital increase.

On Wednesday, Varin emphasized that the alliance was not made in order to solve an overcapacity problem that both automakers are facing at the moment in Eastern Europe.

That is "a question for the short term," he said, noting that the issue cannot wait until 2016, when both companies are set to start developing their vehicles together.

The group's industrial director, Denis Martin, on Tuesday said that PSA expects to deal with the overcapacity problem in the next 18 to 24 months.

Varin also called for political support on any restructuring projects.

"In the situation of overcapacity, the political side should support its industry when it has to make restructuring in the different countries," he said.

"If you look at what happened in the U.S. during the time of the crises, there has been very strong support from the U.S. government," he said.

Copyright Agence France-Presse, 2012

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