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Peugeot ... and new ambassador Novak Djokovic

Peugeot family loses control of company after NZ$6 billion bailout

on February 22 2014 | in Industry news, Latest news | by | with Comments Off

The Peugeot family has for the first time in 118 years reportedly lost full control of French carmaker PSA Peugeot Citroen.

The family’s share has been cut from 25.5 per cent to 14 per cent, the result of a $NZ6 billion rescue package for the company put together by the French government and Chinese carmaker Dongfeng Motor.

Dongfeng, a PSA partner in China, and the French government have each stumped up with around NZ$1.8 billion for a NZ$3.6 billion, or 14 per cent, stake in the car company.

The remaining NZ$2.4 billion will come from existing PSA shareholders. In return the Peugeot family’s share has been slashed  to match that of Dongfeng and the French government.

Carlos Tavares ... new PSA chief

Carlos Tavares … new PSA chief

The bailout will be formalised in about a month when new PSA chief executive Carlos Tavares takes over. Tavares has worked with Dongfeng before, when he was chief operating officer for Renault.

PSA says the cash injection will help it develop new products and markets as it seeks to bounce back from loses, including a record NZ$8.3 billion in 2012, mainly the result of huge write-downs of the value of assets across the entire company. It also lost money making cars.

PSA bounced back somewhat last year for a net loss of NZ$3.8 billion on earnings of NZ$90 billion. Its global sales for 2013 were down 2.4 per cent. The company is not expecting to make a profit until 2016, a year after it originally planned to be in the black.

The patriotic Peugeot family has for years kept 40 per cent of production in France, where prickly unions and a Socialist government make factory closures and job cuts difficult. Rival carmaker Renault (saved from bankruptcy by the French government in the 1980s) makes only 25 per cent of its cars in France, thanks to its long-time partnership with Japan’s Nissan.

The PSA agreement with Dongfeng is expected to be a sales boost for the group in China, where it last year sold 550,000 Peugeot and Citroen cars. Dongfeng sold 3.1 million vehicles in 2013 and is China’s third largest carmaker.

Citroen ... has dominated world rally eventsPeugeot recently appointed tennis champion Novak Djokovic (top) as its global ambassador. Djokovic is particularly popular in China. Citroen admits it should have taken on to the sales floor its almost total domination with Sebastian Loeb of the World Rally Championship.

• The Peugeot family has controlled the financial affairs of the carmaker since Armand Peugeot founded it in 1896. Citroen was founded by Andre Citroen in 1919 and remained independent until 1934 when its main creditor, tyremaker Michelin, took control. Peugeot and Citroen have been partners since 1974, joining forces to combat the effects of the 1973 Arab oil crisis.

 

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