Skip to comments.An American Auto Bailout – For France? (Congratulations, You now own a piece of PSA Peugeot Citroen)
Posted on 03/09/2012 6:41:09 AM PST by SeekAndFind
Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink. Thats right. In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen a 7 percent stake in the company.
Because U.S. taxpayers still own roughly one-quarter of GM, they now own a piece of Peugeot.
Peugeot can undoubtedly use the cash. Last year, Peugeots auto making division lost $123 million. And on March 1 just a day after the deal with GM was announced Moodys downgraded Peugeots credit rating to junk status with a negative outlook, citing severe deterioration of its finances.
In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.
GM has said the deal is designed to give GM access to Peugeots expertise in small car and hybrid vehicle technology and ultimately allow both GM and Peugeot to save money by pooling their resources. But auto industry analysts find the deal mystifying.
An analysis by auto industry consultants IHS said it is somewhat baffling that GM is willing to get involved in an alliance that it frankly does not need for size or complexity, while still avoiding any public plan to rationalize its European production, cut costs, or deal with labour rates.
The deal will allow the Peugeot family to reduce its share of the family business. The family, which Forbes estimated to be worth more than $2 billion, still owns about 30 percent of the company.
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Well who doesn’t want to own a Peugot or a Citroën? Wasn’t there something called a Citroën-Maseratti once? Sounds like a “beautiful catastrophe.”
The company that used to make Oldsmobiles, GMC trucks and GTO's now wants to know how to make French cars.
At the most optimistic the idea may be to stick Peugeot logos on GM cars and thus manage to get a piece of the European market. That could work, in fact it’s hard to see how even Gummit Motors could do worse than Peugeot has.
And how will the family show its gratitude? /rhetorical
And will they show a little more finesse than the Solyndra execs?
Citroen once made a car called the “Deux Chivaux” because it literally had 2 horsepower.
The Deux Chivaux got its name from the two “chevrons” on the front grille. The Citroen “two stripe” was a popular model.
Hey, just put a battery and electric motor in it and sell it for $179,999!
Introducing the new people's car. The Obama 2CV.
Renault, Peugeot, Citroen
Three reasons why the French are known for their fine wine.
The only problems were that the dark blue paint faded and become chalky after three years despite regular waxing and that the vinyl-ish dash covers become brittle and cracked. UV effects were ignored.
Once metric tools were acquired the car was easy to work on. Even had a hand crank for emergency starts and tuning. The family car had 120k miles on it before my dad got a new car.
What the Pig-ooh-ette folk never grasped were service and a decent parts supply chain. They didn't police their dealers and with Gallic indifference and miserly attitude offered no incentives for their dealers. And for the same reasons refused to spend sufficient advertising dollars.
Attitudes shared by Renault and Citroen.