Peugeot leaves door open for tie-up as car sales fall in Europe’s tough market

 
City A.M. Reporter
PSA Peugeot Citroen yesterday left the door open to a possible alliance with a competitor to help the French car maker combat a fall in sales and tough market conditions in Europe.

Speculation has been mounting that PSA could tie up with another car company such as Fiat to deal with overcapacity in the auto industry.

It said the number of cars it sold last year fell 1.5 per cent to 3.5m.

The group’s head of brands, Frederic Saint-Geours, said: “We do not exclude the possibility of accelerating what we’re doing now through a bigger alliance, it’s just that this alliance would need to meet a certain number of conditions – it should be in line with our strategy ... it should yield real synergies ... and the group should remain independent.”

Fiat chief executive Sergio Marchionne said earlier this week that Europe’s car industry needs to consolidate to reverse poor operating conditions and uncertainty in a market burdened by overcapacity.

Some analysts remained to be convinced of the benefits of any tie-up. “We wonder just what the merits of a tie-up with PSA might be, as both companies largely share the same set of problems and combining the two businesses will do nothing to address them,” Credit Suisse analyst David Arnold wrote.

Peugeot has been focusing on emerging markets where premium car demand is strong.