Peugeot's crisis deepens, shares slump as GM sells off

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Peugeot's crisis deepens, shares slump as GM sells off

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Shares in PSA Peugeot Citroen fell a further 12 percent on Friday, after General Motors sold its stake in the struggling French carmaker.

It owned seven percent of Peugeot which was bought early last year as part of their car-building and purchasing alliance.

That partnership will continue in a truncated form, but Peugeot will pursue a tie-up with a Chinese partner Dongfeng which will reportedly invest 1.5 billion euros and the French government could invest the same.

But even then the company’s future is not assured according to Reuters Breakingviews business journalist George Hay: “The DongFeng money and the French state money is pretty much the only game in town. As for whether that actually decisively sorts them out, there are general problems for European car makers, so it’s not a definite.”

GM’s exit does simplify the ownership structure of PSA Peugeot Citroen as talks go on with the Chinese.

French Industry Minister Arnaud Montebourg said the Paris government will wait until those negotiations are concluded before deciding it invests.

Dongfeng and Peugeot already operate three factories together in China, which is the growth market the French firm needs faced with flagging sales in Europe.