Peugeot family says it will remain influential in PSA

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PARIS -- The Peugeot family will remain influential in PSA/Peugeot-Citroen after China's Dongfeng and the French state took stakes in the automaker, Robert Peugeot, head of the FFP family holding company, said.

The Peugeot family saw its share in PSA fall to 14 percent from 25.5 percent last month after a 3 billion euro ($4.1 billion) capital increase in which Dongfeng and the French state each took 14 percent stakes.

Robert Peugeot said the family still has a strong presence in PSA. "We have three representatives on the board and I continue to chair the strategic committee," he told the French business daily Les Echos in an interview.

Asked whether the family could at any time pull out of the automaker, he said: "The answer is a clear 'no'. Our current investment proves that."

Peugeot said Dongfeng will not be able to take control of PSA because none of the other two shareholders can raise their stakes without the agreement of the other two.

He denied that the family's hold on PSA is fragile after the announcement that family member Frederic Banzet will be replaced as head of the Citroen brand on June 1 by the brand's UK head, Linda Jackson. Banzet will go to the family's publicly traded investment company, FFP, where his financial background will be useful. "We do not have a tradition of patronage at Peugeot," Robert Peugeot said. 

GM, BMW, Mitsubishi alliances

Asked whether PSA should have forged a "grand alliance" with another global automaker, Peugeot said General Motors had been PSA's preferred partner but GM's leaders "were afraid of the situation in France and in Europe so they preferred to limit the alliance to three European projects."

He said PSA ruled out expanding its alliances with BMW and Mitsubishi. A deeper tie-up with BMW "would not be a wedding but a surrender" because BMW has 10 times the financial clout of PSA and the two companies had few common needs. PSA needs effective solutions to reduce CO2 emissions while BMW is focused on powerful engines.

Robert Peugeot: Remains PSA strategist.

Photo credit: Reuters

As for Mitsubishi, PSA would have quickly landed in a "terrible situation" because of the yen if a merger had taken place, he said, adding that Mitsubishi's small size also made it unsuitable as a major partner.

Car guy

On PSA's former CEO, Phillipe Varin, who was replaced by Carlos Tavares on March 31, Robert Peugeot said: "In our industry, decisions take effect five years later. It is said Philippe Varin is not a car guy, but he still made a [European] Car of the Year, the Peugeot 308."

Asked why PSA remained in high-cost France instead of becoming more global, he said: "When France joined the euro, nobody imagined that it would result in such a loss of competitiveness in France and such a destruction of industrial jobs." 

Arndt Ellinghorst, head of automotive at International Strategy & Investment (ISI), said: "Not often do you see an executive of his status so openly criticize the impact that the common currency has had on France's position."

PSA has been burning cash rapidly during the European market downturn and is banking on its ties with Dongfeng to help it to fund its future expansion and accelerate its growth in China and other Asian markets.

Reuters contributed to this report

You can reach Paul McVeigh at pmcveigh@crain.com.

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