Peugeot Plans to Sell Stake to Chinese Automaker Dongfeng Motor image

According to anonymous sources PSA Peugeot Citroen plans to sell a stake to Dongfeng Motor to raise money for expansion outside Europe.

The sources said that talks are in preliminary stages and that the automakers have not made any final decision yet. Currently the Peugeot family owns 25.5% of the shares, therefore the stake sale might result in losing control of the company.

During the first half of the year Peugeot reported an operating loss of 510 million euro and continues to lose market share to VW in its home continent. Peugeot has already created a partnership with Chinese automaker Dongfeng, part of its plan to expand outside Europe.

“Their structural shortcoming is: ‘we don’t sell out of Europe,” said Erich Hauser, a London-based analyst at International Strategy & Investment Group. “If you’re the owner of the business or the CEO, and if you think about how to stabilize the business in the next 10 years, you need to get into emerging markets and get a partner.”

Peugeot CEO Philippe Varin has set a target of cutting the automaker’s cash-consumption by 50% this year after it burnt 3 billion euro in 2012. The restructuring strategy also includes closing the Aulnay plant, near Paris, and eliminating 11,200 jobs in France by 2015.

Source: Bloomberg