Peugeot steps back from tie-up with GM as car sales slide further

City A.M. Reporter
PSA PEUGEOT Citroen and General Motors are scaling back their alliance as the French car firm pursues an investment by China’s Dongfeng and the US group seeks greater control of its destiny in Europe.

Peugeot, whose exposure to recession-hit European markets led to a €5bn (£4.26bn) loss last year, said yesterday a small car programme at the heart of the GM alliance plan was likely to be cancelled.

“Further analysis showed that the business model just wasn’t there,” a Peugeot spokesman said, without elaborating. A GM spokesman declined to comment on the project.

Peugeot yesterday revealed its third-quarter sales fell 3.7 per cent to €12.11bn as the firm continued to lose ground to VW and other major competitors at home.

The group claimed 10.9 per cent of regional car sales between January and September, down almost a percentage point.

The revenue decline reflects “growing pressure on market shares from premium and low-cost brands”, Peugeot said, as well as the impact of a weaker Brazilian real and other currencies against the euro.

Peugeot nonetheless yesterday reiterated its goal to cut 2013 operational cash consumption at least by half to €1.5bn, with a further “very significant reduction” next year.