It was one of the main talking points of the Frankfurt auto show: Would PSA/Peugeot-Citroen help DaimlerChrysler develop a four-seat Smart? PSA was expected to provide D/C's Micro Compact Car with key components, such as engines or chassis parts - or entire platforms - for a future, bigger version of the Smart city car.
Talks between the two groups were disclosed mid-August by Automotive News Europe, then confirmed by top executives Jurgen Hubbert (D/C) and Jean-Martin Folz (PSA). Industry watchers wondered if the talks could go much further than components supply and limited joint ventures. But there was no official confirmation at Frankfurt.
That hasn't stopped the speculation, however. 'One day, DaimlerChrysler will become a predator again,' said a top executive with a major European carmaker. 'It will seek to complete its brand portfolio, and it will realize it lacks a good, generalist brand. In this respect PSA - or Fiat - could be potential targets.'
But a number of industry insiders are skeptical about a broad alliance between PSA and D/C. Any tie-up would force the Peugeot family to relinquish, partly or totally, control of the company it has run for more than a century.
Therefore, 'a takeover bid is practically impossible,' said Patrice Solaro, auto analyst with Julius Baer bank in Paris. 'Anyway, DaimlerChrysler is too big to merge with PSA. Technical agreements are more likely than a merger deal.'
It is also important to look at PSA's attitude toward alliances. Since the D/C deal in May 1998, PSA Chairman Jean-Martin Folz has constantly stressed that PSA prefers 'limited cooperation' with other carmakers rather than mergers.
Folz frequently refers to the joint ventures with Fiat in minivans and light commercial vehicles, and with Renault in powertrain development (V-6 engines and automatic gearboxes).
But Folz has extended the scope of PSA's joint ventures. The latest example is a broad cooperation with Ford in making direct-injection diesel engines. Folz has also outsourced more components to suppliers. Other PSA deals were not concluded. According to an industry source in France, in 1998 Citroen held serious discussions with Toyota about building a four-wheel-drive leisure vehicle in the RAV-4 mold. No deal was done.
'As long as cooperation is good for the group, we'll practice it,' said Robert Peugeot, executive vice president in charge of innovation and quality. 'We (the family) are the guarantee of PSA's identity.' That is also the opinion of Pierre Peugeot, chairman of PSA's supervisory board. In a July interview with Automotive News Europe, he said: 'I believe in continuity, because the car industry needs a long-term approach. As far as I am able to, I will make sure that a Peugeot remains chairman of the supervisory board.'
Stephane Farhi is Automotive News Europe's staff reporter in Paris.