PSA’s troubles could spread to market rival Renault image

According to Renault’s CEO Carlos Ghosn, his company would face problems of its own if things go south with PSA Peugeot Citroen as both rival companies have an often-overlapping supply chain.

As tomorrow is the date when Peugeot’s board of management is due to meet and discuss the approval of the much-debated plant to increase the cash capital of the company through a share issue that would see China’s Dongfeng and the French state take matching stakes, concerns are raised around the future of PSA.

“We have absolutely no interest in our French competitor getting into serious difficulty, for the simple reason that we share lots of suppliers,” said Mr. Ghosn in an interview with the RTL radio station. “If these suppliers were themselves to get into difficulty because PSA or another automobile manufacturer were in a situation of falling sales and production we would also be in difficulty,” he said.

In order to cut down the cost of big inventories, automakers have often adopted the just-in-time supply chain systems that would also make them particularly vulnerable of one or more parts suppliers would be unable to manufacture their products.

Via The Wall Street Journal