PSA Peugeot Citroen said its alliance with General Motors could be scaled back, as the automaker – Europe’s second-largest – posted a 3.7 percent quarterly revenue decline and announced it may not reach a $1 billion savings target in 2016 as planned.
Plans for a joint small-car program with GM are “under review”, Paris-based Peugeot said on Wednesday as the company continues to lose ground to rivals in Europe.
“As a result, the announced mid-term (alliance) synergies may be readjusted downwards,” Peugeot said in a statement.
“Only this alliance could have saved them; it’s the beginning of the end,” said Florent Couvreur, an analyst at CM-CIC Securities who recommends selling the shares. “This was an alliance that was set with minimum targets and now Peugeot is all by itself. It’s losing on all counts.”
PSA, a distant European second to Volkswagen in sales is fighting losses by cutting domestic jobs and plant capacity while pursuing tie-up talks with Chinese partner Dongfeng Motor Co.
Revenue fell to 12.11 billion euros ($16.68 billion) in the three months ended September 30 from 12.58 billion in the year-earlier period, Peugeot said. The carmaker has continued to lose European market share this year to VW and other major competitors. Currency effects also contributed to the sales decline, it said.
Peugeot Chief Executive Officer Philippe Varin’s deal in early 2012 with GM has been a cornerstone of his strategy to turnaround Europe’s second-largest carmaker by tapping GM’s scale to cut costs. The slow financial impact of the two-year-old alliance puts additional pressure on the carmaker to find new partners amid a cash crunch.
Via Reuters, Bloomberg
by Aurel Niculescu
) - Wednesday, October 23rd, 2013 - filed under Citroen
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Discuss: PSA rethinks its alliance with GM due to falling revenue