Report – Unions open to French gov taking stake in PSA image

French unions said they are open to the French state acquiring a stake in the loss-making automaker PSA Peugeot Citroen – though saying the key question was the survival of local jobs and control of the group.

This is actually a reaction to the recent news reports that PSA was on the verge of a 3 billion euro ($4 billion) capital increase that would see Chinese partner Dongfeng Motor and the French government taking matching stakes in the troubled carmaker. According to people familiar with the matter, the draft deal has Chinese state owned Dongfeng and the French government each bringing 1.5 billion euros in cash and thus claiming 20 to 30% of the carmaker.

“The strategy (of PSA) is defined by the management of the group, which declared it wanted to expand existing industrial partnerships, notably with two partners – General Motors and Dongfeng,” said French Finance Minister Pierre Moscovici.

A Dongfeng stake would be a “sustainable solution”, Christian Lafaye of Force Ouvriere union said, adding: “We can’t deny that the Chinese have the wind behind them and the money.”

“It might be enough to keep activities going but it’s not certain it would save all the jobs … PSA’s market share is continuing to fall,” added Franck Bieri from the CGC management union.

Peugeot, which relies heavily on the battered European region’s sales, had an 18% drop in August sales, further eroding its European market share to 11% for the first eight months of the year, which is a decrease of around a percentage point year-on-year.

Via Reuters