Peugeot May Reduce Collaboration With General Motors

PSA Peugeot Citroen can scale back its collaboration with US based General Motors Company (GM)  as the struggling French car maker reported a decline of 3.7 percent in quarterly revenue, reports Reuters.

Peugeot losing to rivals

 Peugeot, who is losing against the rivals in Europe, said that its plan with GM to come up with a small car jointly was “Under Review.”

Peugeot said, “As a result, the announced mid-term (alliance) synergies may be readjusted downwards.”

Peugeot, which lags behind the leader Volkswagen in European market in terms of sales, is struggling to minimize its losses despite cutting domestic jobs and plant capacity. The car maker is holding discussions for a tie up with Chinese partner Dongfeng Motor Co.

The carmaker has been losing its European market share to Volkswagen and other rivals in the current year. Currency fallout has also led to drop in sales, Peugeot added.

Peugeot has maintained that it will bring down its 2013 operational cash consumption at least by half to around 1.5 billion euros with a further “very significant reduction” of cash consumption next year.

For the second quarter, Peugeot posted revenue of 12.11 billion euros ($16.68 billion), which is a decline from 12.58 billion for the same period last year. For the first half of 2013, Peugeot had a cash balance of 7.71 billion euros, excluding listed subsidiary Faurecia.

Troubled Partnership

Earlier in 2012, GM acquired a 7 percent ownership in PSA Peugeot Citroen what carmakers saw as big scale collaboration.

According to FoxBusiness, the partnership entered the dark phase when General Motors said that its Chinese partner SAIC would not agree to major plans like larger cars.

In June 2013, Peugeot earned French Government approval to bring back to shape the tie-up with GM’s Opel division, but General Motors turned down the proposal citing reasons like the continuation of CEO Dan Akerson by early 2015, and political sensitivities. The United States government has 7.3% stake in General Motors, as of now.

Blemished by the string of drawbacks with the General Motors, Peugeot Chief Executive Philippe Varin headed for other options of cash supply, which are at present the roaring concerns for company’s financial health.